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INVOLVE was incorporated as a not-for-profit voluntary health and welfare organization on January 1, 2020. During...


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.)

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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)

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