Question: A newly established not for pro t organization engaged in the following transactions

A newly established not-for-profit organization engaged in the following transactions.
1. A donor pledged $1,000,000, giving the organization a legally enforceable 90-day note for the full amount.
2. The donor paid $300,000 of the amount pledged.
3. The organization purchased a building for $600,000, paying $120,000 and giving a 30-year mortgage note for the balance. The building has a 30-year useful life. When appropriate, the organization charges a full-year’s depreciation in the period of acquisition.
4. It hired employees. By the end of the period, they had earned $4,000 in wages but had not yet been paid. The organization accounts for its activities in a single fund.
a. Prepare journal entries to record the transactions, making the following alternative assumptions as to the organization’s measurement focus:
• Cash only
• Cash plus other current financial resources (i.e., cash plus short-term receivables less short-term payables)
• All economic resources
b. Based on your entries, prepare appropriate statements of revenues and expenses and balance sheets.

  • CreatedAugust 13, 2014
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