Reference no: EM132857306
Question - Good Charity is a new not-for-profit organization that opened in January 2020. It is funded by government grants and private donations. It prepares its annual financial statements using the deferral method of accounting for contributions and uses only one fund to account for all activities.
Required -
1) Prepare all related journal entries for the following transactions for Good Charity for 2020:
a) Jan 1: a donor contributes land for a future operations site. Land has a fair value of $32,000.
b) Feb 1: A donor contributes $60,000 on the condition that the principal amount be invested in marketable securities and that only the income earned from the investment be spent on operations. Income of $2,000 was earned and received during 2020 on these investments.
c) General donations of $85,000 were received during 2020.
d) Feb 1: the government gave $80,000 to Good Charity to purchase equipment and furniture with a useful life of 10 years. This was all used to purchase $100,000 of equipment and furniture on July 1, 2020 and the operation opened in a rented facility on July 2, 2020.
e) Costs of $72,000 were incurred during 2020 of which $48,000 were paid.
2) Prepare the following statements for Good Charity based on the above:
i) The statement of operations for the year ended December 31, 2020.
ii) The statement of changes in net assets for the year ended December 31, 2020.
iii) The statement of financial position at December 31, 2020.
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