Question

PLEASE SHOW ALL CALCULATION FOR NOTE RECEIVABLE.

A newly established not-for-profit organization engaged in the following transactions: 1. A donor pledged $1,000,000, giving the organization a legally enforceable 90-day note for the full amount. 2. The donor paid 300,000 of the amount pledged. 3. The organization purchased a building for $600,000, paying $120,000 and giving a 30-year mortgage note for the balance. The building has a 30-year useful life. When appropriate, the organization charges a full year's depreciation in the period of acquisition. 4. It hired employees. By the end of the period, they had earned $4,000 in wages but had not yet been paid. The organization accounts for its activities in a single fund A. Prepare journal entries to record the transactions, making the following alternative assumptions as to the organization's measurement focus: *Cash Only *Cash plus other current financial resources (ie. cash plus short-term receivables less short-term payables) *All economic resources B. Based on your entries, prepare appropriate statements of revenues and expenses and balance sheets

Answer 1

SOLUTION:-

Cash focus

a. No entry necessry - no cash involved

b. Cash....................$300,000

Contribution revenues..............$300,000

c. Building acquisition expenditure....................$120,000

Cash............................$120,000

d. No entry necessary - no cash involved

Cash + other current financial resources focus

a. Note

receivable........................$1,000,000

Contribution

revenue.................................$1,000,000

b. Cash..............................$300,000

Note

receivable.............................$300,000

c. Building acquisition expenditure........................$120,000

Cash.........................................$120,000

d. Wage expense.............................$4,000

Wages payable...................................$4,000

All economic resources focus

a. Note

receivable....................................$1,000,000

Contribution

revenue................................$1,000,000

b. Cash...........................$300,000

Note

receivable .......................................$300,000

c.Building......................................$600,000

Cash........................................$120,000

Mortgage note

payable...................................$480,000

Depreciation expense.........................$20,000

Accumulated depreciation............................$20,000

d. Wage expense................................$4,000

Wages payable.....................................$4,000

B. Statement of revenues and expenses and balance sheets

Statement of revenues over expendditure
	Cash	Current Financial resources	All economic resources
Contribution revenue	300,000.00	1,000,000.00	1,000,000.00
Building acquisition expenditure	120,000.00	120,000.00	20,000.00
Wage expenditure expense	0.00	4,000.00	4,000.00
Total expenditure	120,000.00	124,000.00	24,000.00
Excess of revenue over expenditure	180,000.00	876,000.00	976,000.00
Balance sheet
	Cash	Current financial resources	All economic resources
Assets:
Cash	180,000.00	180,000.00	180,000.00
Note receivabel		300,000.00	300,000.00
Building (less accumulated depreciation)			580,000.00
Total assets	180,000.00	480,000.00	1,060,000.00
Liabilities and Fund balance:
Wages payable		4,000.00	4,000.00
Mortgage note payable			480,000.00
Fund balance	180,000.00	476,000.00	576,000.00
Total liabilities and fund balance	180,000.00	480,000.00	1,060,000.00

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