Question

Assume Charlotte Museum (which has a December 31st year end) received the following contributions in 2020. Prepare journal entries to record these events and any year-end adjusting journal entries resulting from the events.(a) Unrestricted pledges of support were received in the amount of $300,000. All of these are due within the year and it is estimated that 7% will ultimately prove to be uncollectible.(b) 600 Memberships were sold to the public in the amount of $45 each. Membership provides the individual with a monthly magazine and other benefits. The estimated fair value of member benefits is $20. The member year runs from July 1 to June 30.(c) A local carpenter donated supplies and labor with values of $25,000 and $30,000 (respectively) to construct a new exhibition area. Fixed assets are classified as unrestricted net assets.(d) On April 1, 2020 a local businessman made a pledge payable in a future period. The pledge is restricted in purpose and has a present value of $110,000 (effective interest rate of 5%). (15 pts.)

Answer 1

ANSWER:

Required Journal entries and adjusting entries:

Event	Particulars	Debit (in $)	Credit (in $)
a	Pledges Receivable	300,000
	To Contribution revenue - unrestricted		279,000
	To Allowance for uncollectible pledges (300,000 * 7%)		21,000
b	Cash (600 * 45)	27,000
	To Deferred Revenue (600 * 20)		12,000
	To Contribution revenue - unrestricted (600 * 25)		15,000
	Deferred revenue [12,000 * (6 / 12)]	6,000
	To Membership revenue		6,000
c	Building and Structures	55,000
	To Contribution revenue - unrestricted donated supplies		25,000
	To Contribution revenue - unrestricted donated services		30,000
d	Pledge Receivables	110,000
	To Contribution revenue (temporary restricted)		110,000
	Accrued interest	4,125
	To Contribution revenue (temporary restricted)		4,125
	(110,000 * 5%) (9 / 12)