Reference no: EM132739399
An organization began the year with the following balances in their accounts:
Cash $ 20,000
Accounts Receivable, Net 36,000
Pledges Receivable 300,000
Inventory 20,000
Property, Plant, and Equipment, Net 450,000
Accounts Payable 35,000
Notes Payable 220,000
Wages Payable 34,000
Net Assets with Donor Restrictions 177,000
Net Assets without Donor Restrictions 360,000
The organization uses straight-line depreciation method and assumes a 10% salvage value at the end of the life cycle. They use Last In First Out (LIFO) system of inventory management.
The foundation had the following financial events during the current year:
1. December 21. Paid its employees $65,000 of wages in cash for the year, $60,000 of which was for the current year, and $5,000 of which was for the outstanding balance owed. Employees earned $80,000 in wages for the year.
2. December 31. Make a Wish had purchased the building it operates from for 1 million dollars (ten years back) for an expected life of 20 years (This is reflected in the starting PPE balance). Account for the depreciation on the organization's building for the year.
Problem 1: How would you record these transactions in a Transaction Worksheet or show the effects on the fundamental equation of accounting?