Reference no: EM133206314
In 2021, the Toronto Museum had the following transactions:-
i. The Museum was awarded a grant of $3million from the Provincial Government. Of that amount, $1.55million was provided for office space which included an estimated $700,000 to acquire a head office in Toronto, and the remaining $850,000 to cover additional rentals for the next 2 years. The remaining $1.45 million was to cover operating costs. $800,000 was received immediately and the remaining $650,000 will be received in January 2022.
ii. The Museum bought a building in downtown Toronto for $700,000. The property's fair value was $900,000 but the owner sold it for the lower price since the Museum was used by family members. The expected life of the building is 20 years.
iii. The Museum paid salaries of $200,000 for office personnel during the year. $95,000 for a fundraiser hired to raise funds for endowment and yearly operations and $150,000 for an executive director. They also paid $25,000 to train volunteers.
iv. The annual fundraising campaign ,which began in October and ended in December, yielded pledges of $400,000, of which $300,000 had been collected by the year end.
v. The fundraiser secured a major endowment of $550,000 on October 1st,2021 from an individual whose relative had spent several months at the Museum researching a rare species of animal. The interest on the endowment can be used at the Museum's discretion. The funds were invested in Government bonds. The bonds pay interest of 5% annually.
vi. Deferred revenue from last year's fund raising activities are in the ledgers this year and was made up of the following :-
Contributions.............................................................2,000,000
Less: Campaign expenses............................................(1,400,000)
Deferred income....................................................... ... 600,000
vii. A campaign to raise funds for next year's operations was held in December 2022. Cash of $1,000,000 was collected and pledges of $500,000 received. It is expected that 5% of those pledges will be uncollectible. Total fundraising costs was $900,000 of which $100,000 is still remaining to be paid.
Required:-Prepare the journal entries for the above transactions using the Deferral Method of Accounting.