A newly established Chessie Foundation engaged in the following transactions:

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5.   A newly established Chessie Foundation engaged in the following transactions:

  1. A donor made a $1,000,000 pledge, giving the organization a legally enforceable 90-day note for the full amount.

2.       The same donor paid $500,000 of the amount pledged.

  1. The Foundation purchased a building for $900,000, paying $90,000 in cash and giving a ten-year mortgage for the balance. The building has a 25-year useful life.  The organization charges a half-year’s depreciation for all assets in the year they are acquired.
  2. The organization hired five employees.  At year-end, these employees had earned $10,000 in salaries and wages for which they had not been paid.

The Foundation accounts for its activities in a single fund.

 

a.   Prepare journal entries to record the transactions, making the following alternative assumptions as to the organization’s measurement focus:

·      Cash only

·      Cash plus other current financial resources (cash plus short-term receivables less short-term payables)

·      All economic resources

 

b.   Based on your entries, prepare appropriate operating statements and balance sheets for the organization.

    • 8 years ago
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