Question

The Fine Art Museum, a not-for-profit entity, allocated expenses 80% to programs and 20% to general and administrative.

Answer 1

The preparation of the necessary journal entries for The Fine Art Museum is as follows:

Journal Entries:

a. Debit Cash $500,000

Credit Admissions Fees $500,000

• To record the receipt of admissions fees in cash from visitors.

b. Debit Cash $250,000

Credit Admissions Fees $250,000

• To record the receipt of special admissions fees for "Friends of the Museum."

c. Debit Salary Expense $250,000

Credit Salary Payable $60,000

Credit Cash $190,000

• To record salary expense paid and payable.

d. Debit Operating Expenses $400,000

Credit Operating Expenses Payable $30,000

Credit Cash $370,000

• To record operating expenses paid and payable.

Debit Supplies $50,000

Credit Operating Expenses $50,000

• To transfer operating expenses to Supplies.

Debit Supplies Expense $30,000

Credit Supplies $30,000

• To record supplies expense for the year.

e. Debit Pledges Receivable $200,000

Debit Cash $150,000

Credit Pledges Receivable $150,000

Credit Allowance for Uncollectible Pledges $30,000

• To record pledges receivable and allowance for uncollectibles.

f. Debit Cash $600,000

Credit Sale of collections $600,000

• To record the sale of wonderful collections from a will.

Data Analysis:

Allocation of Expenses:

Programs = 80%

General and Administrative = 20%

a. Cash $500,000 Admissions Fees $500,000

b. Cash $250,000 Admissions Fees $250,000 ($25 x 10,000)

c. Salary Expense $250,000 Salary Payable $60,000 Cash $190,000

d. Operating Expenses $400,000 Operating Expenses Payable $30,000 Cash $370,000

Supplies $50,000 Operating Expenses $50,000

Supplies Expense $30,000 Supplies $30,000

e. Pledges Receivable $200,000 Estimated Receivable Pledges $170,000

Uncollectible Pledges $30,000

Cash $150,000 Pledges Received $150,000

f. Cash $600,000 Sale of collections $600,000

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