Reference no: EM131704325
Question: (Journal entries for contributions to a VHWO) Feed the Needy (FTN), a VHWO, has three programs:
(a) providing meals for the needy in its own facility (Service to Needy program);
(b) providing meals for senior citizens through a contract with the County Department for the Aging (Service to Seniors program); and distributing food to other facilities in the area that serve the needy (Food Distribution program). FTN maintains a warehouse to store donated food and has cooking and serving facilities. It does not use fund accounting. Prepare journal entries to record the following transactions and events, which occurred during calendar year 2013:
1. On January 10, 2013, in response to its annual fund-raising drive to finance day-to-day operations, FTN received $150,000 of cash donations and $400,000 of promises to donate cash. Based on experience, FTN expected to collect 80 percent of the promises to donate cash, all of which was to be used to finance its activities during 2013.
2. During the year, FTN received cash of $310,000 from the promises to give (see transaction 1) and wrote off the remaining receivables as uncollectible.
3. To meet its expanding operations, FTN determined that it needed to add storage facilities at an estimated cost of $400,000. Dr. Ted Golfit, noted research engineer, advised FTN that he would contribute $200,000, provided FTN raised an equal amount from other sources.
4. Attorneys A. and E. Gorman provided free legal services to FTN during the year. FTN would have purchased the services for $10,000 if they had not been donated.
5. FTN raised $220,000 in cash as a result of its fund-raising campaign to add to its storage facilities (see transaction 3). FTN contacted Dr. Golfit, who gave FTN a check for $200,000.
6. FTN constructed additional storage facilities at a cost of $425,000. It paid for the facilities by using $420,000 it had raised for that purpose (see transaction 5) and by using $5,000 of its unrestricted available cash.
7. FTN's contract with the County Department for the Aging called for the county to make quarterly advance payments to FTN. The contract required FTN to report to the county after the end of each quarter, showing actual costs to provide food during the quarter and billing for any difference between actual costs and the advance. On January 5, 2013, FTN received a $20,000 advance payment from the county.
8. Between January and March 2013, FTN spent $23,000 in cash providing services through its contract with the county (see transaction 7). On April 4, 2013, FTN sent an invoice to the county, showing it had spent $23,000 on the program, deducting the $20,000 advance, and requesting an additional $3,000.
9. During 2013, FTN received donations of 600,000 pounds of food from supermarkets, bakeries, and food wholesalers. FTN valued the food at $1.50 per pound, based on a national study. All donated food is initially recorded in inventory.
10. FTN distributed 540,000 pounds of food to other facilities under its Food Distribution program and used 30,000 pounds of food in its Service to Needy program (see transaction 9).
11. Local residents donated 1,000 hours of their time serving food at FTN's facility. If the residents had not donated their time, FTN would have paid $7 an hour for the services.
12. FTN paid $200,000 to store food in its warehouse, to package and deliver food to other facilities, and to cook at its own facility. The $200,000 was charged to the following programs:
Food Distribution- $175,000;
Service to Needy- $25,000.