Fairchild Centre is an NFPO funded by government grants and private donations. It was established on January 1 , Year 5 , to provide counselling services and a drop-in centre for single parents. On January 1, Year 5 , the centre leased an old warehouse in the central part of Smallville for $1,950 per month. It carried out minor renovations in the warehouse to create a large open area for use as a play area for children and three offices for use by the executive director and counsellors. The lease runs from January 1, Year 5 , to June 30 , Year 7 . By that time, the centre hopes to move into new quarters that are more suitable for the activities carried out. The following schedule summarizes the cash flows for the year ended December 31, Year 5 : Additional Information 1. The provincial government agreed to provide an operating grant of $58,500 per year. In addition, the government has pledged to match contributions collected by the centre for the purchase of land for construction of a new complex for the centre. The maximum contribution by the government toward the purchase of land is $117,000. 2. The centre has signed an agreement to purchase a property in the downtown area of Smallville for $263,250. There is an old house on the property, which is currently used as a rooming house. The closing date is any time between July 1, Year 6 , and December 31, Year 6 . The centre plans to demolish the existing house and build a new complex. 3. The centre has recently commenced a fundraising program to raise funds to purchase the land and construct a new building. So far, $67,860 has been raised from individuals toward the purchase of the land. In the new year, the centre will focus its efforts to solicit donations from businesses in the area. The provincial government will advance the funds promised under its pledge on the closing date for the purchase of the property. 4. All the people working for the centre are volunteers except for the executive director and the counsellors. The executive director receives a salary of $38,400 a year, while the counsellors bill the centre for professional services rendered based on the number of hours they work at the centre. The director has not yet received her salary for the month of December. One of the counsellors received an advance of $1,500 in December, Year 5 , for work to be performed in January, Year 6. 5. The Centre wants to use the restricted fund method of accounting for contributions. The Centre will use two separate funds-operating and capital. The capital fund will capture contributions pertaining to property, building and equipment. Required: (a) (i) Prepare the journal entry to record the pledge by the provincial government towards the purchase of land, if applicable. (Omit \$ sign in your response.) (a) (ii) Indicate the fund in which the journal entry would be recorded. Operating fund Capital fund
