Food Services FS collects food for distribution to people in
Food Services (FS) collects food for distribution to people in need. During November 2013, its first month of operations, the organization collected a substantial amount of food and also $54,000 in cash from a very wealthy donor. The donor specified that the money was to be used to pay down a loan that the organization had with the local bank.
The loan had been taken out to buy land, on which the organization plans to build a warehouse facility. A warehouse is needed since, although the organization does not plan to keep a lot of food in stock, sorting and distribution facilities are crucial. FS has also received $100,000, which according to the donor is to be invested and maintained, with any income earned to be used as FS sees fit.
-Prepare the journal entries that FS would make assuming that it uses the deferral method of accounting and does not maintain separate funds.
-Prepare the statement of financial position after the transactions have occurred.
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