Loading...

Messages

Proposals

Stuck in your homework and missing deadline? Get urgent help in $10/Page with 24 hours deadline

Get Urgent Writing Help In Your Essays, Assignments, Homeworks, Dissertation, Thesis Or Coursework & Achieve A+ Grades.

Privacy Guaranteed - 100% Plagiarism Free Writing - Free Turnitin Report - Professional And Experienced Writers - 24/7 Online Support

Journal entry to release restricted funds

04/12/2021 Client: muhammad11 Deadline: 2 Day

Not-For-Profit Accounting

Reviewing Net Asset Classifications
Accounting for Contributions
Accounting for donated services
Accounting for Pledges
Conclusion
You are believer that new employees should practice their accounting skills before "throwing them into the fire." Therefore, you have listed a series of transactions that require journal entries and updating of T-Accounts. You know that preparing nonprofit journal entries are easy, so you ask the new employee to
prepare, side by side, the correct journal entry for the identical transaction:
once for a nonprofit entity
once for a for-profit company
include notes for each transaction
Transaction 1: Assume a nonprofit has a restricted fund for capital asset purchases. Compare the journal entries for the cash purchase of a $10,000 computer by the nonprofit, to how the journal entry would look for this for-profit.

Transaction 2: Assume that a nonprofit has a need for $80,000 for a particular new marketing expenditure, and a for-profit entity needs to raise an additional $80,000 to pay for some unanticipated marketing expenses. How would the journal entities look at the acquisition of the funds and the subsequent spending of the funds?

Transaction 3: The for-profit entity sells $120,000 with net 30-day terms, while the nonprofit entity has a fund raising drive for which they receive pledges of $120,000. How do the two journal entries look?
Grading Criteria
30% 0-30 pts For Transaction 1, prepare, side by side, the correct journal entry for a nonprofit entity and a for-profit company.
30% 0-30 pts For Transaction 2, prepare, side by side, the correct journal entry for a nonprofit entity and a for-profit company 1.
30% 0-30 pts For Transaction 3, prepare, side by side, the correct journal entry for a nonprofit entity and a for-profit company.
10% 0-10 pts All Notes in the journal entries are correct.
Unrestricted funds
Used for general operations of the organization or may be designated by the Board for a special purpose
Temporarily restricted funds
restricted through donor imposed criteria that will be satisfied either by a specific action or through the passage of time
Permanently restricted funds
The donor stipulates that the principal (corpus) being donated must remain intact and only the proceeds that result from the investment (i.e., interest income and/or dividends) can be used for a specific purpose
Example of temporarily restricted: An example would be a group of donors funding a memorial bench in the memory of a colleague. The specific action would be the purchase of the bench. Finally there are permanently restricted funds.

Example of permanently restricted: Perhaps the example most of us are familiar with would be that of an individual endowing $1 million to set up a scholarship fund. The intent is to retain the $1 million in perpetuity, using only the interest income generated by the $1 million for the actual scholarships. In times of recession, the number scholarships awarded in a year can be significantly impacted.

*

Net Asset Class Permanently Restricted Temporarily Restricted Unrestricted
Types of Restrictions Donor-imposed Permanent in nature Not removable by organization Donor-imposed or implied Met by 1. Passage of time 2. Use of resources for restricted purpose No donor-imposed restriction
Examples Permanent endowments Required preservation of assets (art, land) Assets restricted to use (research, capital assets) Assets restricted for use for time certain Pledges receivable in future All other net assets Board-designated resources not donor-restricted
A donor contributes $50,000 to a NPO to sponsor an event scheduled for next year. Should the event not occur, the donation will be forfeited and given back to the donor. Since there is an condition (the holding of the event) the NPO would record the cash received as an asset with a corresponding temporarily restricted support. When the condition is met, FAS No. 117 requires a 2 step process

This purpose type restriction is known as a temporary restriction. The donor could have also placed a time restrictions on the use of resources, such as the building must be built within the next two years otherwise the donation reverts to the donor.

*

Record the release the funds from the restriction

Record the actual use of the released funds

T Pharmacy donated $10,000 to host a dinner at the Physicials Annual Meeting.

The Church of the Holy General Ledger (a religious NFP) had a restricted fund (generated from a fund raising event) specifically created to purchase a RV (a capital asset) which will drive to bring the mass to shut aged accountants. Create the JE to purchase the RV $350,000.
Nonprofit
1/1/2010 Resources released from Restricted Capital Fund $350,000
Cash $350,000
Note: Release restricted fund for purchase of RV
1/1/2010 RV – capital asset $350,000
Resources released from Restricted Capital fund $350,000
Note: Record the expenditure to purchase the RV
When people volunteer their time (services), this is usually not recorded.
Volunteer services (FASB 116) can be recorded only if they are professional in nature & the NPO would have to pay for the service otherwise. Assume an accountant donates his/her services to audit a NPO, valued at $10,000. This would be recorded (unrestricted) as:
Expense-Professional Services10,000

Revenue-Contributed Services 10,000

Jeff, an electrician, donates his time to rewire the church which has old knob and tube wiring. Jeff usually charges $25,000 to rewire a building of the church’s size. He also helped serve dinner for 2 hours in the Church’s homeless shelter. What is the journal entry?
Pledges are unconditional promises to contribute cash or other assets or services in the future.
Based on FASB 116, unrestricted pledges are reported as revenue in the period received, based on present value (estimated future cash flows discounted for relative risk). Pledges expected to be collected within one year need not be discounted.
Pledges of $100,000 are received. We will record in the pledge in the year it is made. It also happens that $60,000 will be collected this year:
Unrestricted Fund

Pledges Receivable 60,000 Revenue from Contributions 60,000

Cash 60,000 Pledges Receivable 60,000

$40,000 of the pledges will not be collected this year, of which $10,000 is expected to be uncollectible:
Temporarily Restricted Fund

Pledges Receivable 40,000 Allowance for Uncollectible Pledges 10,000 Revenues from Contributions 30,000

How would a NFP calculate an allowance for uncollectible pledges?
Do you think a NFP should be able to record revenue when a pledge is made even though the cash may be received much later or throughout the year, why?
Depreciation on capital assets must be recognized as expense for NPs (FASB 93). The expense is unrestricted, even if the capital assets are restricted.
Assume a foundation records annual depreciation of $5,000. The entry is (unrestricted):
Depreciation Expense 5,000 Accumulated Depreciation 5,000

Would a NFP ever have intangible assets? What form would those intangible assets take?
Net Asset Classifications – 3 different funds
Accounting for Contributions – No restrictions vs. restrictions (2 step process)
Accounting for donated services - Volunteer services (FASB 116) can be recorded only if they are professional in nature & the NPO would have to pay for the service otherwise
Accounting for Pledges - unrestricted pledges are reported as revenue in the period received
Conclusion
Call me at 630-337-1808
Example of temporarily restricted: An example would be a group of donors funding a memorial bench in the memory of a colleague. The specific action would be the purchase of the bench. Finally there are permanently restricted funds.

Example of permanently restricted: Perhaps the example most of us are familiar with would be that of an individual endowing $1 million to set up a scholarship fund. The intent is to retain the $1 million in perpetuity, using only the interest income generated by the $1 million for the actual scholarships. In times of recession, the number scholarships awarded in a year can be significantly impacted.

*

This purpose type restriction is known as a temporary restriction. The donor could have also placed a time restrictions on the use of resources, such as the building must be built within the next two years otherwise the donation reverts to the donor.

*

Step 1: Record the release of the fund from restriction

06/01/XXResources released from temporarily restricted account50,000$

Cash50,000$

To record the use of the cash per the restricted fund requirements

Step 2: Record the actual use of the released funds

06/01/XXExpenses related to annual conference event50,000$

Resources released from restriction50,000$

To show annual conference event expense from a restricted fund

Step 1: Record the release of the fund from restriction

What account10,000.00$

What account10,000.00$

To record the release of the cash restricted for dinner at the Annual Mtg

Step 2: Record the actual use of the released funds

What account10,000.00$

What account10,000.00$

To show the dinner expense form a restricted fund

Homework is Completed By:

Writer Writer Name Amount Client Comments & Rating
Instant Homework Helper

ONLINE

Instant Homework Helper

$36

She helped me in last minute in a very reasonable price. She is a lifesaver, I got A+ grade in my homework, I will surely hire her again for my next assignments, Thumbs Up!

Order & Get This Solution Within 3 Hours in $25/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 3 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 6 Hours in $20/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 6 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 12 Hours in $15/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 12 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

6 writers have sent their proposals to do this homework:

Assignment Helper
Supreme Essay Writer
Peter O.
Assignment Hut
Top Academic Guru
Homework Guru
Writer Writer Name Offer Chat
Assignment Helper

ONLINE

Assignment Helper

As an experienced writer, I have extensive experience in business writing, report writing, business profile writing, writing business reports and business plans for my clients.

$33 Chat With Writer
Supreme Essay Writer

ONLINE

Supreme Essay Writer

I have done dissertations, thesis, reports related to these topics, and I cover all the CHAPTERS accordingly and provide proper updates on the project.

$22 Chat With Writer
Peter O.

ONLINE

Peter O.

This project is my strength and I can fulfill your requirements properly within your given deadline. I always give plagiarism-free work to my clients at very competitive prices.

$29 Chat With Writer
Assignment Hut

ONLINE

Assignment Hut

I will be delighted to work on your project. As an experienced writer, I can provide you top quality, well researched, concise and error-free work within your provided deadline at very reasonable prices.

$45 Chat With Writer
Top Academic Guru

ONLINE

Top Academic Guru

Being a Ph.D. in the Business field, I have been doing academic writing for the past 7 years and have a good command over writing research papers, essay, dissertations and all kinds of academic writing and proofreading.

$36 Chat With Writer
Homework Guru

ONLINE

Homework Guru

I have read your project details and I can provide you QUALITY WORK within your given timeline and budget.

$37 Chat With Writer

Let our expert academic writers to help you in achieving a+ grades in your homework, assignment, quiz or exam.

Similar Homework Questions

10 short answers - Ideal home show ireland - The dark child chapter 1 summary - Nutrition Research Paper ***** TOPIC**** Diabetes insipidus and pregnancy - Diageo case study capital structure - Information systems - In expanded academic asap, choosing only peer-reviewed articles indicates that you'll - How do you solve stoichiometry problems - Expressing errors in measurement worksheet answers - Why cultural diversity matters michael gavin - Initiating the Project - Problem Set 1 - What word does the adjective clause modify - Dimensions of personal identity - Rc circuit differential equation solution - Asset maintenance engineer job description - ALLIED HEALTH PHARMACO - List of airbus a380 orders and deliveries - Unit 7 the developing manager - Capstone Instructions - Vatterott instructure - Lab 1 introduction to science - Armstrong axiom drywall trim - Deep purple band members - Action conveyancing heidi mander - Pregnancy soap note example - Chapter 18 critical thinking renewable energy answer key - Buns bakery master budget - Questions - Sheffield city council funerals - Information tech - Hey green primary school - DIscussion - Https tmidm uspto gov id master list public html - Girl interrupted case study - Honeywell cylinder stat wiring - Ing increase credit card limit - How to insert tables and figures in table of contents - Al waqas medical practice - Contrived contingency - Drug czar presentation - Role of School Nurse A4 - Leather sector skill council - Five pillars of reading - Political parties and interest groups worksheet - Wild west produces two types of cowboy hats - 4 dimensions of competency examples - Afi framework - Tommy the clown events - Analyzing Student Data: The RTI Model - Is helium a chemical property - Whole foods competitive strategy - As of december 31 2017 armani company's financial - Emory hospital clinical trials - Identifying research gaps in literature review - Gung ho book discussion questions - English Communication - Entice and barbie of the danger zone - Why is the reflective-practice phase of metacognition also referred to as “double-looped learning”? - 3 phase cable colours - Week 9 - A pair of tickets amy tan theme - French grades to gpa - 1 zinnea court mill park - Old spice competitors - Suppose that purely competitive firms producing cashews discover that p exceeds mc. - Service management process ppt - The illusion of taking charge learning disability - How to look at onion cells under microscope - Bilateral escrow instructions - 1550 autojet spray controller - Wendy Lewis 3 - Don t know much about history cover - Is butane an ideal gas - Ambleside primary school resources - Competency assessment supplement - Drama report card comments - Mary kay cosmetics case study - Front office department chart - BI A - Dr kazmi st albans - Lexi from vampire diaries - Nursing assignment - Isabel clinical decision support - Baking soda and vinegar limiting reactant lab answers - A package of mass m is released from rest - Birla mt gordon pty ltd - Problem Set - World religions vocabulary word list - Portfolio Assignment: The Role of the Nurse Informaticist in Systems Development and Implementation,NURS 5051/NURS 6051: Transforming Nursing and Healthcare Through Technology - Pick one of the following terms for your research: Moral philosophy, justice, white-collar crime, differential association, or power. - Bad things about phones in school - Reference List 5 - Blackburn gurdwara langar timings - Futility wilfred owen analysis - Bill gates characteristics as an entrepreneur - Mousetrap car forward and backward - Katharine kolcaba comfort theory powerpoint - Chiasmus in julius caesar - Mirrlees blackstone mb 275 - Shadow health neurological transcript