Funds are separate fiscal and accounting entities, each with its own self-balanc
ID: 2441828 • Letter: F
Question
Funds are separate fiscal and accounting entities, eachwith its own self-balancing set of accounts.
The newly established Society for Ethical
Teachings maintains two funds—a general fund
for operations and a building fund to accumulate
resources for a new building. In its first year, it
engaged in the following transactions.
a. It received cash contributions of $200,000, of
which $40,000 was restricted for the acquisition
of the new building.
b. It incurred operating costs of $130,000, of
which it paid $120,000 in cash.
c. It earned $3,000 of interest (the entire amount
received in cash) on resources restricted for the
acquisition of the new building.
d. It transferred $17,000 from the operating fund
to the new building fund.
e. It paid $12,000 in fees (accounted for as
expenses) to an architect to draw up plans for
the new building.
1. Prepare journal entries to record the transactions.
Be certain to indicate the fund in which
they would be made.
2. Prepare a statement of revenues, expenditures,
and other changes in fund balances and a
balance sheet. Use a two-column format,
one column for each of the funds.
Explanation / Answer
Date Particulars Amount (Dr.) Amount (Cr.) a) Contributions $200,000 Acquisition Fund 40,000 General Fund 160,000 To record receipts of contributions b) operation Expenses 130,000 Cash 120,000 Outstanding operating expenses 10,000 To record operating expenses c) Cash 3,000 Acquisition Fund 3,000 Interest earned transferred to Acquisition d) Acquisition Fund 17,000 General Fund 17,000 e) Architect Fee 12,000 Cash 12,000 To record Architect fee statement showing the revenues and expenditure Particulars General Fund Debit Amount Building Fund Debit Amount Date particulars General Fund Credit Amount Building Fund Credit Amount Contributions 160,000 40,000 operating expenses 120,000 Interest earned 3,000 Architect Fee 12,000 Balance Sheet Liabilities: Outstanding operating expenses 10,000 Funds General Fund (40,000 +17,000) 57,000 Building Fund (43,000-12,000-17,000) 14,000
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