A building and a parcel of land is donated by the City to Vegan Life. The land
Question:
A building and a parcel of land is donated by the City to Vegan Life. The land has a fair market value of $50,000. The building has a fair market value of $150,000, an estimated life of 30 years with no residual value.
VegaForce helps organize a fund raiser in March to raise money to fund general operations of the current year. No cash was collected but pledges of $100,000 were received. Per reliable historical experience, 60% of these pledges are usually not collected. At the end of 2019, a notice is received by Vegan Life. It states that some of the contributors from last year are no longer fulfilling their pledges. They represented 5% of the balance of pledge receivable that existed as of January 1, 2019.
Cash of $200,000 was received on April 1 from the Mr. Vego. These funds are restricted for the purchase of a farm that will enable to organization to grow and sell their own vegetables.
On February 1, the organization buys the farm for $750,000. $200,000 came from the restricted funds provided by Mr. Vego. The remainder came from unrestricted resources. The building is the only depreciable asset that the Company has ever bought with restricted resources.
The depreciation for the year was $100,000. 40% of that amount related to the depreciation of assets bought with restricted resources.
The organization uses an encumbrance system in order to control expense closely. In 2019- orders estimated to $50,000 were issued for the purchase of goods and services. Invoices of $43,000 were received on orders that were initially recorded at an estimate cost of $46,000. 10% of these invoices were unpaid at the end of the year. These invoices received related to the following programs: Vega-Fit: $30,000/Vega-Food: $10,000/ Vega-Juice: $3,000
Salary expenses for the year amounted to $400,000. 10% remained unpaid at year-end.
Required
a) Prepare the journal entries for the organization for the 2019 year under the deferral method & the restricted fund method.
Intermediate Accounting
ISBN: 9781259722660
9th Edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas