Record the following events that affect the loan activities of Private University:1. An alumnus donates $420,000 to establish the student loan fund. Students are charged a 5% annual interest rate.2. Loans of $380,000 are made to students.3. The remaining $40,000 is deposited in the university credit union, which pays a current interest rate of 7%.4. Loans of $20,000 are repaid, plus $800 of interest.5. Interest of $1,400 is received from the university credit union.6. A student who had borrowed $1,000 was in a serious automobile accident and withdrew from school. The university wrote off the loan as uncollectible.
Record the following events that affect the loan activities of Private University:
1. An alumnus donates $420,000 to establish the student loan fund. Students are charged a 5% annual interest rate.
2. Loans of $380,000 are made to students.
3. The remaining $40,000 is deposited in the university credit union, which pays a current interest rate of 7%.
4. Loans of $20,000 are repaid, plus $800 of interest.
5. Interest of $1,400 is received from the university credit union.
6. A student who had borrowed $1,000 was in a serious automobile accident and withdrew from school. The university wrote off the loan as uncollectible.
Accounting treatment of private Universities loans: Loan funds are established to account for resources that are available for loans primarily to students and possibly to faculty and staff. A separate fund is used because of the large amounts of federal and state resources made available to universities for students' loans. In addition, donor-restricted contributions may also specify the use of the contributed resources for student loan purposes.
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