Savior is a not for profit organization formed on January 1 2013
Savior is a not-for-profit organization formed on January 1, 2013. It is committed to helping children who are in danger due to family abuse situations. The organization is funded by the provincial government and private donations. Savior is in touch with all the local schools and community centers. It is also involved in referring families to the various agencies and in creating awareness of problems that exist. During 2013, the following transactions occurred:
1. Savior was awarded a grant of $50,000 from the provincial government. Of that, $10,000 was provided for the rent of office space. The remaining $40,000 is given to fund operations for the year. An installment of $25,000 was received immediately and the other half will be received on January 1, 2014. In order to receive the second installment, Savior must show payroll receipts of at least $10,000 by November 30, 2013.
2. Savior bought a photocopy machine for $3,000. The machine's actual fair value is $5,000 but the office machine company owner sold it for a lower amount since he is committed to the cause. The machine is expected to have a two-year life.
3. Savior paid salaries of $15,000 for office personnel during the year, $10,000 for a part-time fundraiser hired to raise funds for endowments and yearly operations, and $5,000 for the part-time director.
4. Savior paid $2,000 to train volunteers to work with at-risk children.
5. Savior held a bake sale at the end of August specifically for a project to create an after-school program. It incurred costs of $500 and raised $8,000 in donations.
6. The fundraiser secured a major endowment of $50,000 on September 1, 2013. The interest on the endowment can be used at Savior's discretion. The funds were invested in government bonds. The bonds pay an annual inter est of 3%.
7. Savior does not use fund accounting.
(a) Prepare the journal entries that Savior would make in 2013.
(b) Prepare the financial statements for Savior as at December 31, 2013.
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