The OPI Care Centre is an NFPO funded by government grants and private donations. It prepares its annual financial statements using the deferral method of accounting for contributions, and it uses only the operations fund to account for all activities. It uses an encumbrance system as a means of controlling expenditures.
The following summarizes some of the transactions made in Year 6:
1. The founding member of OPI contributed $100,000 on the conditions that the principal amount be invested in marketable securities and that only the income earned from the investment is spent on operations.
2. During the year, purchase orders were issued to cover the budgeted cost of $1,400,000 for goods and contracted services.
3. During the year, a public campaign was held to raise funds for daily operations for the current year. Cash of $800,000 was collected, and pledges for an additional $100,000 were received by the end of the year. It is estimated that approximately 95% of these pledges will be collected early in the new year.
4. The provincial government pledged $600,000 for the year to cover operating costs and an additional $1,000,000 to purchase equipment and furniture. All of the grant money was received by the end of the year, except for the last
$50,000 to cover operating costs for December.
5. OPI used the $1,000,000 received from the provincial government to purchase equipment and furniture for the care facility. The amortization of these assets amounted to $100,000 for the year. A purchase order had not been issued for this purchase.
6. Invoices totaling $1,450,000 were received for goods and contracted services. Of these invoices, 90% were paid by the end of the fiscal year. Purchase orders in the amount of $1,375,000 had been issued for these services.
Required:
In accordance with the requirements of the CICA Handbook, prepare the journal entries necessary to reflect the transactions.