Question

Record each of the following journal entries for a nongovernmental, not-for-profit charity involved in medical research. If no journal entry is recorded, explain why there is no journal entry.

1. The entity received $1,500 in cash contributions. Of that amount, $1,000 is to be used for medical research.

2. The entity received pledges of $700,000 for its endowment fund. All pledges will be collected next year.

3. The entity received donated services of $1,200 from medical researchers who helped with the entity’s on-going drug development research. It also received $300 in donated services from students, who helped clean the research facilities.

4. The entity paid medical research operating expenses of $5,000 that were related to restricted net assets it had received in prior years.

Answer 1

Answer
Journal Entry
No.	Account titles and explanation	Debit	Credit
1	Cash	$        1,500
	To, Contributions—Unrestricted		$           500
	To, Contributions		$        1,000
	( To record cash contribution and medical research)
2	Pledges Receivable	$   7,00,000
	To, Contributions		$   7,00,000
	(To record Contributions—Permanently Restricted)
3	Medical Research Program Expenses	$        1,200
	To, Contributions—Unrestricted		$        1,200
	(To record Medical Research Program Expenses)
4	Medical Research Program Expenses	$        5,000
	To, Cash		$        5,000
	(To record Medical Research Program Expenses)
	Net Assets Release - Satisfaction of Program Restrictions - Temporarily Restricted	$        5,000
	To, Net Assets Released- Satisfaction of     Program Restrictions- Unrestricted		$        5,000