Community College has an operating fund, a scholarship fund and an endowment fund. All scholarship donations are taken to the endowment fund and the contributions are invested to earn investment income. Some donors have stipulated that their endowments must be protected against inflation by using investment income to increase the endowment balance to keep pace with inflation. Other donors have specified that all investment income is to be used for scholarships.On January 1, 2017, the first year of the fund, endowment contributions of $2,000,000 were received, of which half required that the endowment be protected against inflation. All donations were invested in fixed interest securities and the investment income for the year totalled $100,000. Inflation for 2017 was at 2.5%.On December 31, 2017, scholarships in the amount of $65,000 were awarded at a scholarship ceremony. All scholarships were paid to the recipients by cheques drawn on the scholarship fund bank account.Required:Provide all necessary journal entries for 2017 to account for the receipt of the donations, the investment of the funds, the receipt of the investment income, (all of which had been received in cash by the year-end) and the payment of the scholarships. Clearly indicate the fund to which each journal entry will be posted. Prepare the necessary journal entries for 2017 for these transactions if Kerrisdale Community College did not use fund accounting but used the deferred contribution method for recording revenuesJOURNAL ENTRYDATEACCOUNT NAME1/1/2017 CashEndowment Contribution(To record endowment contribution received in cash)1/1/2017 CashInvestment(To record income received from invested…
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