Reference no: EM133173475

Question - The WCC is a not-for-profit organization funded by government grants and private donations. It prepares its annual financial statements using the restricted fund method of accounting for contributions. The following summarizes some of the transactions that were made in Year 4.

a. January 1, a member of WCC donated marketable securities valued at $200,000 with the condition that the principal amount cannot be spent and the income earned from the investment be spent on operations. A return of 4.5% was earned in the current year.

b. On March 31, a corporation donated land with a fair value of $20,000.

c. During the year, a public campaign was held to raise funds for daily operations for the current year. Cash of $950,000 was collected, and pledges for an additional $100,000 were received by the end of June. It was estimated that approximately 90% of these pledges will be collected by the end of the year. By December 31, $96,000 of these pledge receivables were collected and no more will be collected.

d. The provincial government pledged $500,000 for the year to cover operating costs and an additional $300,000 to purchase machinery. All of the grant money was received by the end of the year, except for the last $40,000 to cover purchase of machinery for December.

e. On August 1 st , WCC used the $300,000 received from the provincial government to purchase machinery for the care facility. The useful life of the machinery was 10 years, no residual value.

f. Late December, office furniture costing $5,000 was purchased with operating/general fund cash

g. On March 1, a local housing development donated office space for WCC to use. The space normally rents for $500 a month.

h. User fees totaling $4,000 was collected over the year. 40% of these fees are to be used towards operations in Year 5.

i. Invoices totaling $1,000,000 were received for daily operations. Of these invoices, 90% were paid by the end of the fiscal year.

Required -

i) Prepare the journal entries necessary to reflect the above transactions for Year 4. State the fund for each journal entry.

ii) Statement of Revenue and Expenses (in good format) for the year ended December 31, Year 4. Show separate lines for each type of contribution/revenue.