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:
- 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.
- 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.
- 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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