How should the pledges be reflected on help today

Assignment Help Financial Accounting

Reference no: EM132809008

On January 1, 20X6, a $500,000 endowment was received from the estate of Carmen Foxx. The funds were invested in a bond, purchased on par, that pays 3 percent interest annually on December 31. The interest may be used by the NFPO for operating or programming costs.

On December 24, 20X6, Help Today received a donation of $45,000 from Dr. Chen. Dr. Chen stipulated that the donation must be used to buy a new van. Help Today used the donation to purchase a van on January 2, 20X7. The van will be amortized over five years, using the straightline method. No residual value is expected.

Required:

Problem a) Prepare journal entries for 20X6 and 20X7 for the above donations using the

i. deferral method and

ii. restricted fund method

Problem b) At Help Today's annual fundraiser, pledges of $225,000 were received. How should these pledges be reflected on Help Today's financial statements?

Reference no: EM132809008

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