Question

On January 1, 2020, a foundation made a pledge to pay $15,000 per year at the end of each of the next five years to the Cancer Research Center, a nonprofit voluntary health and welfare organization, as a salary supplement for a well-known researcher. On December 31, 2020, the first payment of $15,000 was received and paid to the researcher. On the books of the Cancer Research Center, record the pledge on January, assuming the appropriate discount rate is 5 percent on an annual basis. The appropriate present value annuity factor is 4.32948. Record the increase in the present value as of December 31. Record the receipt of the first $15,000 on December 31 and the payment to the researcher. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Round intermediate calculations and final answers to the nearest whole dollar.)

Answer 1

Answer:

                                   Journal entries

           General journal                                    Debit    Credit

1) Contribution receivable                             $64,942

     ($15000 * 4.32948 )

           Contribution- temporarily restricted                $64,942

2)  Contribution receivable                             $3,247

       ($64942 * 5%)

            Contribution- temporarily restricted               $3,247

3)  Cash contribution - receivable                  $15,000

            Contribution- receivable                                $15,000

Reclassification from temporarily restricted net

Assets expiration from temporarily restrictions

  Reclassification to unrestricted net assets  $15,000

           Expiration of time restrictions                           $15,000

Research expenses:

Salary statement                                               $15,000  

    Cash                                                                          $15,000