The following are selected transactions for Lakeview Cooperative which uses the restricted fund method. Lakeview has an operating fund, a capital fund and an endowment fund:Pledges amounting to $550,000 were received, of which $75,000 applies to the operations of the following year. It is estimated that 3% of the pledges will be uncollectible.A former resident who became a successful businessperson, donated $80,000 to be held in an endowment. Interest on the endowment is unrestricted.The association purchased furniture and fixtures at a cost of $14,000. These purchases were made using operating funds.Pledges of $350,000 were collected, while pledges amounting to $5,500 were written off as uncollectible.A local newspaper agreed to offer Lakeview a full-page ad. This had an estimated value of $1,500.Interest and dividends received amounted to $8,000 on endowment fund investments.Amortization for the year amounted to $20,000.Required:Prepare journal entries to record the above transactions. Also, indicate which fund will be used for each entry

The journal entries have been prepared below.

Answered: at 3% of the pledges will be…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following are selected transactions for Lakeview Cooperative which uses the restricted fund method. Lakeview has an operating fund, a capital fund and an endowment fund:

Pledges amounting to $550,000 were received, of which $75,000 applies to the operations of the following year. It is estimated that 3% of the pledges will be uncollectible.
A former resident who became a successful businessperson, donated $80,000 to be held in an endowment. Interest on the endowment is unrestricted.
The association purchased furniture and fixtures at a cost of $14,000. These purchases were made using operating funds.
Pledges of $350,000 were collected, while pledges amounting to $5,500 were written off as uncollectible.
A local newspaper agreed to offer Lakeview a full-page ad. This had an estimated value of $1,500.
Interest and dividends received amounted to $8,000 on endowment fund investments.
Amortization for the year amounted to $20,000.

Required:

Prepare journal entries to record the above transactions. Also, indicate which fund will be used for each entry

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