on January 1, 2017 a foundation made a pledge to pay 18,000 per year at the end
ID: 2535759 • Letter: O
Question
on January 1, 2017 a foundation made a pledge to pay 18,000 per year at the end of each of the next five years to the cancer research center a nonprofit voluntary health and welfare organization as a salary supplement for a well known researcher. on december 31, 2017 the first payment of 18,000 was received and paid to the researcher.
1. on the books of the cancer research center record the pledge on january 1 in the temporarily restricted asset class assuming the appropriate discount rate is 5 percent on an annual basis. the appropriate discount factor is 4.33
2. Record the increase in the present value of the receivables in the temporarily restricted net asset class as of december 31
3. record the receipt of the first 18,000 on december 31 and the payment to the researcher. indicate in which asset class (unrestricted, temporarily restricted) each account is recorded.
Explanation / Answer
1)
Date Particulars Debit Credit
01.01.2017 Contributions Receivable (18,000 x 4.33) 77940
Contributions-Temporarily Restricted 77940
2)
Date Particulars Debit Credit
31.12.2017 Cash 18,000
Contributions Receivable 18,000
Net Assets- Expiration of Time Restrictions 18,000
Reclassification to Unrestricted Net Assets- Expiration of Time Restriction 18,000
Research Expense: Salary Supplement 18,000
Salary 18,000
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