Question

E13.17 Contributions Received on Behalf of Others

The United Way receives contributions and distributes them to other NFP organizations. Some of its transactions for the current year are as follows:

1. Donors contribute $5 million, designated to specific unaffiliated NFP organizations. $3 million of this money is distributed according to donor wishes during the current year.

2. Donors contribute $2 million, to be distributed to unaffiliated NFP organizations selected by United Way. United Way distributes $1.8 million of these donations in the current year.

3. Donors contribute $1 million, to be distributed to a specific affiliated organization. United Way distributes $900,000 of these donations in the current year.

Required

Prepare journal entries to record the above activities. If the item affects net assets, identify the category affected.

Answer 1

	Particulars		Dr. ($)	Cr ($)
1	Cash A/c		5
		To Revenue A/c		5
	(Being contribution received)
	Revenue A/c		3
		To Cash A/c		3
	(Being distribution of contribution)
2	Cash A/c		2
		To Revenue A/c		2
	(Being contribution received)
	Revenue A/c		1.8
		To Cash A/c		1.8
	(Being distribution of contribution)
3	Cash A/c		1
		To Revenue A/c		1
	(Being contribution received)
	Revenue A/c		0.9
		To Cash A/c		0.9
	(Being distribution of contribution)

Category in case net assets are affected-

- Revenue account is restricted reserve account, hence will be utilized in the manner donor specifies. Therefore, utilized fund in Revenue account will be reflected as a liability in the Balance Sheet which is to be utilized in the future years.