Select the correct answer for each of the following questions.

1. Which basis of accounting should a voluntary health and welfare organization use?

a. Cash basis for all funds.

b. Modified accrual basis for all funds.

c. Accrual basis for all funds.

d. Accrual basis for some funds and modified accrual basis for other funds.

Questions 2 and 3 are based on the following data:

Town Service Center is a voluntary welfare organization funded by contributions from the general public. During 20X6, unrestricted pledges of \(\$ 800,000\) were received, half of which were payable in 20X6, with the other half payable in 20X7 for use in 20X7. It was estimated that 10 percent of these pledges would be uncollectible. In addition, Helen Ladd, a social worker on Town's permanent staff, earning \(\$ 30,000\) annually for a normal workload of 1,500 hours, contributed an additional 600 hours of her time to Town at no charge.

2. How much should Town report as unrestricted contribution revenue for \(20 \mathrm{X} 6\) with respect to the pledges?

a. \(\$ 0\).

b. \(\$ 360,000\).

c. \(\$ 720,000\).

d. \(\$ 800,000\).

3. How much should Town record in 20X6 for contributed service expenses?

a. \(\$ 0\).

b. \(\$ 1,200\)

c. \(\$ 10,000\)

d. \(\$ 12,000\).

4. A voluntary health and welfare organization received a pledge in \(20 \mathrm{X} 1\) from a donor specifying that the amount pledged be used in 20X3. The donor paid the pledge in cash in 20X2. The pledge should be accounted for as:

a. Contribution revenue in \(20 \mathrm{X} 3\).

b. Contribution revenue in \(20 \mathrm{X} 2\).

c. Contribution revenue in \(20 \mathrm{X} 1\).

d. Contribution revenue in the period in which the funds are spent.

5. Turner Fund, a voluntary welfare organization funded by contributions from the general public, received unrestricted pledges of \(\$ 300,000\) during \(20 \times 4\). It was estimated that 10 percent of these pledges would be uncollectible. By the end of \(20 \times 4, \$ 240,000\) of the pledges had been collected. It was expected that \(\$ 35,000\) more would be collected in \(20 \mathrm{X} 5\) and that the balance of \(\$ 25,000\) would be written off as uncollectible. What amount should Turner include as contribution revenue in \(20 \mathrm{X} 4\) ?

Select the correct answer for each of the following questions.
1. Which basis of accounting should a voluntary health and welfare organization use?

a. Cash basis for all funds.

b. Modified accrual basis for all funds.

c. Accrual basis for all funds.

d. Accrual basis for some funds and modified accrual basis for other funds.
Questions 2 and 3 are based on the following data:
Town Service Center is a voluntary welfare organization funded by contributions from the general public. During 20X6, unrestricted pledges of \(\$ 800,000\) were received, half of which were payable in 20X6, with the other half payable in 20X7 for use in 20X7. It was estimated that 10 percent of these pledges would be uncollectible. In addition, Helen Ladd, a social worker on Town's permanent staff, earning \(\$ 30,000\) annually for a normal workload of 1,500 hours, contributed an additional 600 hours of her time to Town at no charge.
2. How much should Town report as unrestricted contribution revenue for \(20 \mathrm{X} 6\) with respect to the pledges?

a. \(\$ 0\).

b. \(\$ 360,000\).

c. \(\$ 720,000\).

d. \(\$ 800,000\).
3. How much should Town record in 20X6 for contributed service expenses?

a. \(\$ 0\).

b. \(\$ 1,200\)

c. \(\$ 10,000\)

d. \(\$ 12,000\).
4. A voluntary health and welfare organization received a pledge in \(20 \mathrm{X} 1\) from a donor specifying that the amount pledged be used in 20X3. The donor paid the pledge in cash in 20X2. The pledge should be accounted for as:

a. Contribution revenue in \(20 \mathrm{X} 3\).

b. Contribution revenue in \(20 \mathrm{X} 2\).

c. Contribution revenue in \(20 \mathrm{X} 1\).

d. Contribution revenue in the period in which the funds are spent.
5. Turner Fund, a voluntary welfare organization funded by contributions from the general public, received unrestricted pledges of \(\$ 300,000\) during \(20 \times 4\). It was estimated that 10 percent of these pledges would be uncollectible. By the end of \(20 \times 4, \$ 240,000\) of the pledges had been collected. It was expected that \(\$ 35,000\) more would be collected in \(20 \mathrm{X} 5\) and that the balance of \(\$ 25,000\) would be written off as uncollectible. What amount should Turner include as contribution revenue in \(20 \mathrm{X} 4\) ?

a. \(\$ 300,000\).

b. \(\$ 275,000\).

c. \(\$ 270,000\).

d. \(\$ 240,000\).
Items 6 through 9 are based on the following:
On January 1, 20X2, State Center Health Agency, a voluntary health and welfare organization, received a bequest of a \(\$ 200,000\) certificate of deposit maturing on December \(31,20 \mathrm{X} 6\). The contributor's only stipulations were that the certificate be held to maturity and the interest revenue received annually be used to purchase books for the children to read in the preschool program run by the agency. Interest revenue each of the years was \(\$ 9,000\), and the full \(\$ 9,000\) was spent for books each year. When the certificate was redeemed, the board of trustees adopted a formal resolution designating \(\$ 150,000\) of the proceeds for future purchase of playground equipment for the preschool program.
6. What should be reported by the temporarily restricted fund in the \(20 \mathrm{X} 2\) statement of activities?

a. Legacies and bequests of \(\$ 200,000\).

b. Investment income of \(\$ 9,000\).

c. Transfers to unrestricted fund of \(\$ 9,000\).

d. All of the above.
7. What amounts should be reported in the \(20 \times 2\) statement of activities for the unrestricted fund?

a. Legacies and bequests of \(\$ 200,000\).

b. Investment income of \(\$ 9,000\).

c. Transfers from the restricted fund of \(\$ 9,000\).

d. Contributions of \(\$ 209,000\).
8. What should be reported in the 20X6 statement of activities for the unrestricted fund?

a. Transfers from restricted fund of \(\$ 209,000\).

b. Board-designated funds \(\$ 150,000\).

c. Playground equipment \(\$ 150,000\).

d. Transfers to plant and equipment fund \(\$ 150,000\).
9. What should be reported in the December \(31,20 \times 6\), statement of financial position for the unrestricted fund?

a. Liability for purchase of playground equipment \(\$ 150,000\).

b. Due to plant and equipment fund \(\$ 150,000\).

c. Board-designated funds \(\$ 150,000\).

d. Temporarily restricted funds \(\$ 200,000\).