Question

Contributions of assets always have restrictions attached as to their use. 41. During the annual fund-raising drive, the Cancer Society raised $900,000 in pledges of financial support for general operations. By fiscal year-end, the society had collected $600,000 of the pledges. The society estimates that 10% of the remaining pledges will be uncollectible. The NET amount of revenue the society should recognize during the current year from this pledge drive is
a) $900,000.
b) $870,000.
c) $810,000.
d) $600,000.

Answer 1

Answer:

b) $870,000.

Explanation:

Step 1. Given information.

• the Cancer Society raised $900,000 in pledges of financial support for general operations
• Collected 600.000
• The society estimates that 10% of the remaining pledges will be uncollectible

Step 2. Formulas needed to solve the exercise.

Net amount revenue = Mount raised - (remaining pledges * estimation of uncollectibles revenues)

Step 3. Calculation.

$900.000 - $300.000 * 10% = 870.000

Step 4. Solution.

The NET amount of revenue the society should recognize during the current year from this pledge drive is  870.000