Question

Provide complete answers to the following two problems:

1. Assume Towne Center Art Museum (which has a December 31st year end) received the following contributions in 2017. Prepare journal entries to record these events and any year-end adjusting journal entries resulting from the events.
   1. Unrestricted pledges of support were received in the amount of $280,000. All of these are due within the year and it is estimated that 6% will ultimately prove to be uncollectible.
   2. 600 Memberships were sold to the public in the amount of $40 each. Membership provides the individual with a monthly magazine and other benefits. The estimated fair value of member benefits is $15. The member year runs from July 1 to June 30.
   3. A local carpenter donated supplies and labor with values of $25,000 and $20,000 (respectively) to construct a new exhibition area. Fixed assets are classified as unrestricted net assets.
   4. On April 1, 2017, a local businessman made a pledge payable in a future period. The pledge is restricted in purpose and has a present value of $105,000 (effective interest rate of 6%).
2. FASB Statement 136 Transfer of Assets to a Not-for-Profit Organization or Charitable Trust that Raises or Holds Contributions for Others provides guidance on how intermediary recipient organizations should record receipt of resources held for others. Briefly describe the issue and how such transfers should be recorded.

Answer 1