INVOLVE was incorporated as a not-for-profit organization on January 1, 2023. During the fiscal year ended December 31, 2023, the following transactions occurred. A business donated rent-free office space to the organization that would normally rent for $35,300 a year.A fund drive raised $186,500 in cash and $103,000 in pledges that will be paid next year. A state government grant of $153,000 was received for program operating costs related to public health education.Salaries and fringe benefits paid during the year amounted to $208,860. At year-end, an additional $16,300 of salaries and fringe benefits were accrued.A donor pledged $103,000 for construction of a new building, payable over five fiscal years, commencing in 2025. The discounted value of the pledge is expected to be $94,560.Office equipment was purchased for $12,300. The useful life of the equipment is estimated to be five years. Office furniture with a fair value of $9,900 was donated by a local office supply company. The furniture has an estimated useful life of 10 years. Furniture and equipment are considered net assets without donor restrictions by INVOLVE.Telephone expense for the year was $5,500, printing and postage expense was $12,300 for the year, utilities for the year were $8,600 and supplies expense was $4,600 for the year. At year-end, an immaterial amount of supplies remained on hand and the balance in accounts payable was $3,900.Volunteers contributed $15,300 of time to help with answering the phones, mailing materials, and various other clerical activities.It is estimated that 80 percent of the pledges made for the 2024 year will be collected. Depreciation expense is recorded for the full year on the assets recorded in item 5.All expenses were allocated to program services and support services in the following percentages: public health education, 40 percent; community service, 30 percent; management and general, 20 percent; and fund-raising, 10 percent.Net assets were released to reflect satisfaction of state grant requirements that the grant resources be used for public health education program purposes.All nominal accounts were closed to the appropriate net asset accounts. Prepare journal entries to record these transactions. Expense transactions should be initially recorded by object classification; in entry 9, expenses will be allocated to functions.

Journal entry records the accounting transactions of a business in a journal book. All the business…

Answered: INVOLVE was incorporated as a…

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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INVOLVE was incorporated as a not-for-profit organization on January 1, 2023. During the fiscal year ended December 31, 2023, the following transactions occurred.

A business donated rent-free office space to the organization that would normally rent for $35,300 a year.
A fund drive raised $186,500 in cash and $103,000 in pledges that will be paid next year. A state government grant of $153,000 was received for program operating costs related to public health education.
Salaries and fringe benefits paid during the year amounted to $208,860. At year-end, an additional $16,300 of salaries and fringe benefits were accrued.
A donor pledged $103,000 for construction of a new building, payable over five fiscal years, commencing in 2025. The discounted value of the pledge is expected to be $94,560.
Office equipment was purchased for $12,300. The useful life of the equipment is estimated to be five years. Office furniture with a fair value of $9,900 was donated by a local office supply company. The furniture has an estimated useful life of 10 years. Furniture and equipment are considered net assets without donor restrictions by INVOLVE.
Telephone expense for the year was $5,500, printing and postage expense was $12,300 for the year, utilities for the year were $8,600 and supplies expense was $4,600 for the year. At year-end, an immaterial amount of supplies remained on hand and the balance in accounts payable was $3,900.
Volunteers contributed $15,300 of time to help with answering the phones, mailing materials, and various other clerical activities.
It is estimated that 80 percent of the pledges made for the 2024 year will be collected. Depreciation expense is recorded for the full year on the assets recorded in item 5.
All expenses were allocated to program services and support services in the following percentages: public health education, 40 percent; community service, 30 percent; management and general, 20 percent; and fund-raising, 10 percent.
Net assets were released to reflect satisfaction of state grant requirements that the grant resources be used for public health education program purposes.
All nominal accounts were closed to the appropriate net asset accounts.

Prepare journal entries to record these transactions. Expense transactions should be initially recorded by object classification; in entry 9, expenses will be allocated to functions.

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