Question

Fruits & Veggies, a nonprofit, conducts two types of programs: education and research. It does not use fund accounting. During the fiscal year, the following transactions and events took place. Prepare journal entries for these transactions, identifying increases and decreases by net asset classification as appropriate.

1. Pledges amounting to amount pledged. $200,000 were received, to be used for any purpose designated by the trustees. Fruits & Veggies normally collects 90 percent of the amount pledged.
2. Fruits & Veggies collected $190,000 in cash on the amount pledged in the previous transaction. It wrote off the balance as uncollectible.
3. Ed Victor donated $5,000 cash in the current fiscal year, stipulating that it could be used for any purpose, but only during the next fiscal year.
4. Howard Gore donated $675,000, stipulating that the donation must be used solely to purchase a building that Fruits & Veggies could use for research.
5. Fruits & Veggies invested $20,000 of unrestricted resources in equity securities. Earnings on these resources amounted to $1,000 in cash for the fiscal year.
6. Late in the year, Fruits & Veggies used Howard Gore’s donation (see Transaction 4) and unrestricted resources of $140,000 to purchase a building for research purposes.
7. The following services were donated to Fruits & Veggies:
a. Consulting services by an accounting firm— $5,000
b. Professional services by an advertising agency in connection with a fundraising campaign— $3,000
c. Ushering services at educational meetings, provided by high school students. If paid for, these services would cost $1,000
8. At year-end, the investments referred to in Transaction 5 had a fair value of $22,000.
9. Fruits & Veggies conducted a fundraising campaign, the donations to be used solely for research into the health benefits of asparagus. Donations totaled $45,000 in cash.
10. The Board of Directors of Fruits & Veggies designated $35,000 for the acquisition of research equipment.

Note: Expenses and revenues are not recognized for item 7c because ushering services does not require specialized knowledge or expertise.

Answer 1

The detailed answer for the above question is provided below:

Step 1/1

 

Date	Account	Dr	Cr
	Pledge amount receivable	$200,000
	Pledgers		$200,000

Date	Account	Dr	Cr
	Cash	$190,000
	Write off (not receivable)	$10,000
	Pledge receivable		$200,000

Date	Account	Dr	Cr
	Cash	$5,000
	Ed Victor (general pledge)		$5,000

Date	Account	Dr	Cr
	Pledged donation (Purchase building)	$675,000
	Howard Gore		$675,000

Date	Account	Dr	Cr
	Investment Income	$1,000
	Profit and Loss		$1,000

Date	Account	Dr	Cr
	Cash	$1,000
	Investment income		$1,000

Date	Account	Dr	Cr
	Building (purchased for research)	$140,000
	Cash In Bank and On Hand		$140,000

Date	Account	Dr	Cr
	Profiti and loss	=5000+3000+1000
	Consulting service		$5,000
	Professional service		$3,000
	Ushering service		$1,000

Date	Account	Dr	Cr
	Equity and research equipment	$35,000
	Provision		$35,000

Date	Account	Dr	Cr
	Cash	$45,000
	Donations received		$45,000