Atwater Health Services, a voluntary health and welfare organization, has provided support for families with low income in the town of Atwater for approximately 20 years. In 20X6, it conducted a major funding campaign to help replace facilities that are no longer adequate and to generate operating and endowment funds.
The community of Atwater ran a number of special events, and the chamber of commerce made the fund-raising campaign a major activity for 20X6. In 20X6, Atwater Health Services received the following gifts and pledges:
1. The Plentiful family donated a lot adjacent to the current building for future use as a playground and parking lot. The family had purchased the lot for $22,000 several years ago. It had a current value of $42,000 at the date contributed.
2. A number of new pledges were received and many were partially or fully paid in 20X6. The following information was compiled:
Unrestricted pledges for use in 20X6 ................ $120,000
Unrestricted pledges for use in 20X7 ................. 70,000
Pledges to support screening tests for children’s hearing abilities ...... 90,000
Pledge to assist in construction of addition to building; donor agrees to make
eight annual payments of $50,000 each ................ 400,000
$ 680,000

3. Also during 20X6, $45,000 was spent in providing free vision tests for all grade school children in the community. A total of $38,000 collected in 20X4 and 20X5 for this purpose were used to help pay for the costs of providing the tests.

a. Prepare the journal entries for 20X6 for these activities, including receipt of the first installment on the pledge for building construction, which was received at the end of 20X6. Atwater currently earns an 8 percent return on its investments. The present value of the seven future payments of $50,000 is $260,318.
b. Prepare the journal entry or entries recorded at the end of 20X7 upon receipt of the second payment on the pledge for building construction.

  • CreatedMay 23, 2014
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