Question

(a) unrestricted pledges of support were received in the amount of $300,000. all of these are due within the year and it is estimated that 7% will ultimately prove to be uncollectible. (b) 600 memberships were sold to the public in the amount of $45 each. membership provides the individual with a monthly magazine and other benefits. the estimated fair value of member benefits is $20. the member year runs from july 1 to june 30. (c) a local carpenter donated supplies and labor with values of $25,000 and $30,000 (respectively) to construct a new exhibition area. fixed assets are classified as unrestricted net assets. (d) on april 1, 2020 a local businessman made a pledge payable in a future period. the pledge is restricted in purpose and has a present value of $110,000 (effective interest rate of 5%).

Answer 1

The journal entries are given below:

a) Pledges Receivable DR.                  $30,000

              To Contribution revenue - unrestricted                    $27,900  

To Allowance for uncollectible pledges (300,000 * 7%)        $21,000

b) Cash (600*45)  Dr.                            $27,000

           To Deferred Revenue (600* 20)                                  $12,000

           To Contribution revenue -unrestricted (600 * 25)      $15,000

  Deferred revenue  Dr.                         $6,000

    [12,000* (6/12)]

            To Membership revenue                                              $6,000

C) Building and Structures Dr.               $55,000

            To Contribution revenue unrestricted donated supplies  $25,000

          To Contribution revenue - unrestricted donated services   $30,000

d) Pledge Receivables   Dr.                    $110,000

          To Contribution revenue (temporary restricted)             $110,000

Accrued interest        Dr.                           $4,125

           To Contribution revenue (temporary restricted)               $4,125

               (110,000 * 5%) (9/12)

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