Question

The William Robertson Society is a charitable organization funded by government grants and private donations. It prepares its annual financial statements using the restricted fund method in accordance with the CICA Handbook, and uses both an operating fund and a capital fund.
The operating fund records the regular operating activities of the society. An encumbrance system is used within the fund to ensure that expenditures made in any one year do not exceed the amounts budgeted. It is the policy of the society to record donated materials and services received during the year, if such items would have been purchased had they not been received as donations.
The capital fund accounts for moneys received from special fundraising campaigns conducted when there is a need for major fixed assets acquisitions.
The following are some selected events that took place during the current year:
• Pledges for current year's operating costs amounting to $125,000 were received, of which $90,000 was collected in cash.
• Purchase orders were issued during the year as follows:
Office equipment ....... $ 15,000
Goods and services ....... 100,000
• A grant of $70,000 for this year's operations was announced by the government, of which $55,000 had been received by the society at year-end.
• Employee wages totaled $60,000 for the year. Wages amounting to $2,000 were unpaid at year-end.
• Invoices for all of the goods and services ordered during the year were received. Of the invoiced amounts, 70% was paid. The invoiced amounts were equal to those on the purchase orders.
• The office equipment that was ordered arrived. The invoiced amount of $15,300 was paid in cash, using operating funds.
• A local radio station donated free airtime to the society. The station would normally bill a customer $3,000 for this airtime.
• A prominent citizen made a pledge of $35,000 to help fund the operating expenditures of the next fiscal year.
Required:
Prepare the journal entries required to record these events, and indicate in which fund each journal entry will be recorded.


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  • CreatedJune 09, 2015
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