An international children’s charity collects donations, which are used to buy clothing and toys for children in need. The charity records donations of cash and other items as Donations Revenue when received. Prepare journal entries for the following transactions, which occurred during a recent month, and determine the charity’s preliminary net income.
a. Received $ 4,000 in cash and checks from a door- to- door campaign.
b. Paid $ 2,000 cash for employee wages this month.
c. Paid $ 1,000 cash on a short- term loan from the bank (ignore interest).
d. Bought $ 3,000 worth of new toy supplies from a large toy manufacturer, paying $ 1,000 cash and signing a short- term note for $ 2,000.
e. The manufacturer generously donated an additional $ 2,500 of toy supplies.