Final answer:
The question asks how to record a $5040 grant receivable for a survey of art programs, which would be recognized as a debit to Grant Receivable and a credit to Grant Revenue at year-end based on the accrual accounting principle.
Step-by-step explanation:
The student's question refers to the accounting entry required to record a grant receivable of $5040 at the end of the year. This grant is for completing and delivering a survey regarding art programs within the county. In terms of accounting, a receivable is an asset, and since the service (the survey) will be provided, this will also increase revenues. The correct entry for recording the grant receivable will be a debit to Grant Receivable and a credit to Grant Revenue. To reflect this correctly in the accounting records, the entry would look as follows:
- Debit: Grant Receivable $5040
- Credit: Grant Revenue $5040
This is based on the accrual basis of accounting, where revenues are recognized when earned, not necessarily when cash is received. Since the commitment to complete the survey exists and the organization is entitled to this grant upon completion, it would recognize the receivable and the associated revenue at the end of the fiscal year.