On Jan 1, 2020 Charity Co., a not-for-profit organization, had an anonymous donor donate land with a fair value of $40 as well as machinery valued at $100. The machinery has a useful life of six years. Charity has a Dec 31 year end. Required: 1)Assuming that the restricted fund method of accounting for contributions is used and the organization has a general fund and a capital fund. a) Prepare the necessary 2020 journal entries to record the 2020 transactions noted above. b) Indicate the effect of the transactions on 2020 excess of revenue over expenses. 2) Repeat (a) & (b) above assuming instead that the deferral method of accounting for contributions is used and the organization does not use fund accounting.

On Jan 1, 2020 Charity Co., a not-for-profit organization, had an anonymous donor donate land with a fair value of $40 as well as machinery valued at $100. The machinery has a useful life of six years. Charity has a Dec 31 year end. Required: 1)Assuming that the restricted fund method of accounting for contributions is used and the organization has a general fund and a capital fund. a) Prepare the necessary 2020 journal entries to record the 2020 transactions noted above. b) Indicate the effect of the transactions on 2020 excess of revenue over expenses. 2) Repeat (a) & (b) above assuming instead that the deferral method of accounting for contributions is used and the organization does not use fund accounting.

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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