at 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 a
at 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 a
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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:
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