Record the purchase of fixed assets and year end transaction

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Reference no: EM132794102

Big heart is a not for profit organization funded by government grants and private donations. It prepares its annual financial statement using the restricted fund method of accounting for contributions and utilizes an operating fund, a capital fund and endowment fund.

The following summaries some of the transactions that were made in 2020

1. Pledges amounting to $400,000 were received of which $80,000 applies to the operations of the following year. It is estimated that 2%of the pledges will be uncollectible.

2. The organization purchased fixed assets at a cost of $10,000. The assets were estimated to have a useful life of 5 years with no residual value. Straight line amortization is used. The assets were purchased from unrestricted fund sources.

3. Pledges of $300,000 were collected, while pledges amounting to$4,000 were written off as uncollectible.

4. A local newspaper agreed to offer Helpers a full page ad. This had an estimated value of $5,000.

Requires:

Problem 1. Prepare the required journal entries to record the above transaction for Big heart corporation.

Problem 2. For transaction no2, record the purchase of fixed assets and year end transaction using the deferred contribution method, assuming that the assets were purchased using restricted fund for capital assets in the amount of $11,000

Reference no: EM132794102

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