### Handling Donor-Restricted Contributions in Nonprofit Accounting**Scenario:**Etling Center for State Government Policy, a nonprofit organization, receives a cash contribution with donor restrictions of $100,000 in the fiscal year ended December 31, 2021. Of this amount, $40,000 of restrictions are satisfied in the fiscal year ended December 31, 2022. What journal entry would be recorded in 2022 to recognize the satisfaction of the restrictions?**Analysis:**In nonprofit accounting, it's essential to appropriately record the satisfaction of donor restrictions when funds are spent according to donor specifications. For the given scenario, when restrictions are satisfied, it's important to reclassify the funds from net assets with donor restrictions to net assets without donor restrictions.**Journal Entry:**The journal entry recorded in 2022 to recognize the satisfaction of the $40,000 donor restriction would be:1. **Debit** - Net Assets with Donor Restrictions: $40,0002. **Credit** - Net Assets without Donor Restrictions: $40,000This journal entry effectively moves the money from the restricted category (because the restriction condition has been met) to the unrestricted category.

Date Particulars Debit Credit 31 December, 2021 Restricted Cash Contribution - with Donor…

Etling Center for State Government Policy, a nonprofit organization, receives a cash contribution with donor restrictions of $100,000 in fiscal year ended December 31, 2021. Of this amount, $40,000 of restrictions are satisfied in fiscal year ended December 31, 2022. What journal entry would be recorded in 2022 to recognize the satisfaction of the restrictions?

Etling Center for State Government Policy, a nonprofit organization, receives a cash contribution with donor restrictions of $100,000 in fiscal year ended December 31, 2021. Of this amount, $40,000 of restrictions are satisfied in fiscal year ended December 31, 2022. What journal entry would be recorded in 2022 to recognize the satisfaction of the restrictions?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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