Question

INVOLVE was incorporated as a not-for-profit voluntary health and welfare organization on January 1, 2020. During the fiscal year ended December 31, 2020, the following transactions occurred.

1. A business donated rent-free office space to the organization that would normally rent for $35,200 a year.
2. A fund drive raised $186,000 in cash and $102,000 in pledges that will be paid within one year. A state government grant of $152,000 was received for program operating costs related to public health education.
3. Salaries and fringe benefits paid during the year amounted to $208,760. At year-end, an additional $16,200 of salaries and fringe benefits were accrued.
4. A donor pledged $102,000 for construction of a new building, payable over five fiscal years, commencing in 2022. The discounted value of the pledge is expected to be $94,460.
5. Office equipment was purchased for $12,200. The useful life of the equipment is estimated to be five years. Office furniture with a fair value of $9,800 was donated by a local office supply company. The furniture has an estimated useful life of 10 years. Furniture and equipment are considered net assets without donor restrictions by INVOLVE.
6. Telephone expense for the year was $5,400, printing and postage expense was $12,200 for the year, utilities for the year were $8,500 and supplies expense was $4,500 for the year. At year-end, an immaterial amount of supplies remained on hand and the balance in accounts payable was $3,800.
7. Volunteers contributed $15,200 of time to help with answering the phones, mailing materials, and various other clerical activities.
8. It is estimated that 90 percent of the pledges made for the 2021 year will be collected. Depreciation expense is recorded for the full year on the assets recorded in item 5.
9. All expenses were allocated to program services and support services in the following percentages: public health education, 35 percent; community service, 30 percent; management and general, 20 percent; and fund-raising, 15 percent.
10. Net assets were released to reflect satisfaction of state grant requirements that the grant resources be used for public health education program purposes.
11. All nominal accounts were closed to the appropriate net asset accounts.

Prepare journal entries to record these transactions. Expense transactions should be initially recorded by object classification; in entry 10 expenses will be allocated to functions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Round the intermediate and final answers to the nearest dollar amount.)

Answer 1

Ans

S.No.	Account Title & Explanations	Debit	Credit
1	Rent Expense	$35,200
	Contributions - Unrestricted		$35,200
	(To record rent expense)
2	Contribution receivables	$102,000
	Cash	$338,000
	Contributions - Temporarily restricted		$186,000
	Contributions - Unrestricted		$254,000
	(To record contributions received)
3	Salaries & Wages Expense	$224,960
	Cash		$208,760
	Salaries & wages payable		$16,200
	(To record salary & wages expense)
4	Contribution receivables	$102,000
	Contributions - Temporarily restricted		$94,460
	Discount on contribution receivable		$7,540
	(To record contribution earned but not received)
5	Equipment & Furniture	$22,000
	Cash		$12,200
	Contributions - Unrestricted		$9,800
	(To record Equipment & Furniture received)
6	Telephone Expenses	$5,400
	Printing & Postage Expenses	$12,200
	Utilities Expenses	$8,500
	Supplies Expenses	$4,500
	Cash		$26,800
	Accounts Payable		$3,800
	(To record payment of expenses and accrued expenses)
7	No Entry is required
8	Depreciation Expense ($12,200/5 + $9,800/10)	$3,420
	Allowance for Depreciation - Equipment & Furniture		$3,420
	(To record depreciation expense)
9	Public Health Education Program	$102,963
	Community Service Program	$88,254
	Management & General	$58,836
	Fund Raising	$44,127
	Salaries & Wages Expense		$224,960
	Rent Expense		$35,200
	Telephone Expense		$5,400
	Printing & Postage Expense		$12,200
	Utilities Expense		$8,500
	Supplies Expense		$4,500
	Depreciation Expense		$3,420
	(To allocate the expenses to functions)
10	Net Assets released - temporarily restricted	$152,000
	Net Assets released - unrestricted		$152,000
	(To record net assets released)
11	Contributions - Unrestricted (Entry 1, 2 $ 5)	$299,000
	Unrestricted Net assets (Bal. Fig)		$4,820
	Public Health Education		$102,963
	Community Service		$88,254
	Management & General		$58,836
	Fund Raising		$44,127
	(To close nominal accounts)
	Contributions - Temporarily restricted (Entry 2 & 4)	$280,460
	Temporarily restricted net assets		$280,460
	(To close nominal accounts)
	Temporarily restricted net assets	$152,000
	Net Assets released - temporarily restricted		$152,000
	(To transfer temporarily restricted net assets)
	Net Assets released - unrestricted	$152,000
	Unrestricted Net assets		$152,000
	(To transfer Unrestricted Net assets)