(Journal entries for a VHWO) Eye Institute (EI) accounts for its activities by means of a UCF,...
Question:
(Journal entries for a VHWO)
Eye Institute (EI) accounts for its activities by means of a UCF, an RCF, and an LBEF. All resources of the LBEF had been previously transferred to it from the UCF, so that the LBEF contains no restrictions that need to be satisfied. EI's accounting policies require that contributions containing program or time restrictions be recorded initially in the RCF and reclassified to the UCF upon satisfaction of the restrictions. Following are some of the transactions for the EI during 2004.
1. Pledges were received as follows:
2. During the year, 90 percent of all pledges were collected.
3. Amounts received from the United Fund totaled $\$ 1.5$ million.
4. The EI paid $\$ 20,000$ to the United Fund as its share of the fund-raising costs for the year.
5. Salaries for the year totaled $\$ 500,000$, and the related payroll costs were $\$ 100,000$. The entire amount was paid in cash.
6. An additional parcel of land and a small building were acquired, using assets segregated for that purpose. The land was appraised for $\$ 75,000$ and the building was appraised for $\$ 160,000$. The institute paid $\$ 23,500$ down and financed the remainder of the appraised value with a mortgage.
7. Depreciation for the year was $\$ 246,000$.
8. The following general operating costs were paid:
9. Restricted resources were used as follows to conduct research:
10. Unrestricted contributions received in 2004, but designated for use in 2005 , totaled $\$ 35,000$.
11. Equipment that cost $\$ 3,000$ was acquired with unrestricted funds.
12. At the end of the year, management estimates that all the pledges outstanding in the RCF will be collected; however, $\$ 10,000$ of the pledges in the UCF will probably not be collected.
13. At the end of the year, supplies that cost $\$ 500$ were still on hand (see item 8).
14. Interest paid on the mortgage on the land and building was $\$ 20,000$.
15. The distribution of expenses into functional categories in the UCF was as follows: ${ }^{*}$
16. The distribution of depreciation and the interest on the mortgage was as follows: $*$
Required: Prepare the journal entries necessary to record these data; also indicate the fund used for each entry.
Step by Step Answer:
Introduction To Government And Not For Profit Accounting
ISBN: 9780130464149
5th Edition
Authors: Martin Ives, Joseph R. Razek, Gordon A. Hosch