Assume Towne Center Art Museum, a private not-for-profit organization, started the fiscal year ending December 31, 2020 with $33,440 (from the ending balance on December 31, 2019) in donor restricted net assets. The amounts are restricted for the following: restricted for an online educational program $13,440. restricted for future equipment purchases $20,000 (Fixed assets are recorded as unrestricted when acquired). During the fiscal year ended December 31, 2020, the following transactions and events occur: On January 1, 2020, a foundation made a pledge to pay $4,500 per year at the end of each of the next five years to the Towne Center Art Museum for general support (i.e., this pledge is unconditional and there is an implied time restriction). On the books of the Towne Center Art Museum, record the pledge on January 1, 2020, assuming the present value of five (December 31) payments is $19,483 (rounded). The appropriate discount rate is 5% on an annual basis. Expenses related to the online educational program were incurred and paid in the amount of $13,440. The $20,000 received in a prior year for equipment purchases, together with an additional $25,000 was used to acquire equipment. Record the increase in the present value of the pledge as of December 31, 2020 (the annual discount rate is 5%). On December 31, 2020, the first $4,500 installment on the pledge receivable (in transaction #1) was received. Required: Prepare the journal entries necessary for the above transactions and events. (If no entry is required for a transaction/event, state “No entry.”)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Assume Towne Center Art Museum, a private not-for-profit organization, started the fiscal year ending December 31, 2020 with $33,440 (from the ending balance on December 31, 2019) in donor restricted net assets. The amounts are restricted for the following:

restricted for an online educational program $13,440.
restricted for future equipment purchases $20,000 (Fixed assets are recorded as unrestricted when acquired).

During the fiscal year ended December 31, 2020, the following transactions and events occur:

On January 1, 2020, a foundation made a pledge to pay $4,500 per year at the end of each of the next five years to the Towne Center Art Museum for general support (i.e., this pledge is unconditional and there is an implied time restriction). On the books of the Towne Center Art Museum, record the pledge on January 1, 2020, assuming the present value of five (December 31) payments is $19,483 (rounded). The appropriate discount rate is 5% on an annual basis.
Expenses related to the online educational program were incurred and paid in the amount of $13,440.
The $20,000 received in a prior year for equipment purchases, together with an additional $25,000 was used to acquire equipment.
Record the increase in the present value of the pledge as of December 31, 2020 (the annual discount rate is 5%).
On December 31, 2020, the first $4,500 installment on the pledge receivable (in transaction #1) was received.

Required:

Prepare the journal entries necessary for the above transactions and events. (If no entry is required for a transaction/event, state “No entry.”)

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