In each of the following scenarios, an organization receives a contribution in-k

Question

In each of the following scenarios, an organization receives a contribution in-kind. Prepare journal entries, as necessary, to give them accounting recognition. For each, tell why you made an entry or why you did not.

1- A local not-for-profit art museum receives advertising for its yearly benefit from radio station WLOU. The airtime would have cost the museum $1,000.

2- Volunteers for ‘‘Breakfast on Bikes,’’ a voluntary health and welfare organization, deliver hot meals to the elderly three times a week. Each of the ten volunteers works about six hours per week. All of the volunteers have permanent jobs with pay averaging $36.10 an hour.

3- Lynn Simms, a local CPA, maintains the books and records of her church. Although her normal billing rate is $120 per hour, she accepts no payment from the church. She works on church matters approximately four hours a week.

4- A construction company allows a not-for-profit community association to use its bulldozer at no cost to clear land for a new baseball park. If the association had to rent the bulldozer it would have incurred costs of $2,400.

Explanation / Answer

1. Advertising Expense Dr. 1,000

     To Temporary Restricted Contribution Income 1,000

Entry is to be made as it is assumed Musuem is used for generating Revenue.

2. No entry is to be made as it not a specialised service

3. Professional Fees   dr. 480

    To Contribution Income ( for one week) 480

Entry is to be made as it is the specialized service

4. Constructions in Progress (Baseball Park) Debit 2400

     To   Temporary Restricted Contribution Income 2400

Entry is to be made as it is assumed that the baseball park will be used to generate revenues

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