Final answer:
A bequest of $35,000 in securities was made to Snow Mountain College, a nongovernmental not-for-profit college. The decedent specified that both principal and interest were to be used for student loans. The required journal entry to record this transaction is journal entry.
Step-by-step explanation:
The question concerns an accounting transaction for a non-governmental not-for-profit college. When Snow Mountain College receives a bequest of $35,000 in securities for student loans, this creates an inflow of resources that needs to be recorded. According to generally accepted accounting principles for non-profit organizations, the journal entry to record such a bequest, when both the principal and interest are to be used for a specified purpose, would involve debiting an asset account and crediting a restricted net asset account.
Specifically, the entry would likely be a debit to Securities (or a similar asset account) and a credit to Restricted Contributions – Student Loans (or a similar net assets account). This entry acknowledges that the securities are an asset that will generate income for the college and also recognizes the donor's restriction that both principal and interest are to be used for student loans.