Chapter 5, Problem 1.6E

A county received $3,000,000 from the state. Of that amount, $1,500,000 was received under an entitlement program and was not restricted as to use. The other $1,500,000 was received under a grant agreement that requires the funds to be used for specific health and welfare programs. The county accounts for the resources from both of these programs in a Special Revenue Fund. Expenditures of that fund that qualified under the grant agreement totaled $900,000 in the year that the grant and entitlement were received. What amount of revenues should the county recognize in that year with respect to the entitlement and the grant?

1. a. $900,000
2. b. $1,500,000
3. c. $2,400,000
4. d. $3,000,000