Question

In Yew Co.’s 2004 annual report, Yew described its social awareness expenditures during the year as follows:"The Company contributed $250,000 in cash to youth and educational programs. The Company also gave $140,000 to health and human service organizations, of which $80,000 was contributed by employees through payroll deductions. In addition, consistent with the Company’s commitment to the environment, the Company spent $100,000 to redesign product packaging."What amount of the above should be included in Yew’s Income Statement as charitable contributions expense?A. $310,000 B. $390,000 C. $410,000 D. $490,000

Answer 1

Answer:

A. $310,000

Explanation:

The computation of charitable contributions is shown below:

= Contributed cost towards youth and educational programs + Contributed cost towards health and human service organizations.

= $250,000 + $60,000

= $310,000

The contribution cost towards health and human service organizations is calculated by applying the formula which is shown below:

= Contribution cost towards heath and human service organizations -  employee deduction

= $140,000 - $80,000

= $60,000

The Company’s commitment to the environment is not a charitable contribution. Thus, it is ignored.

Answer 2

Answer:

A. $310,000

Explanation:

With the provided information we have,

Charitable contributions on part of company shall include:

Amount contributed to youth and educational programs = $250,000

Amount contributed to health and human service = $140,000

Less: Amount contributed by employees from their salary = ($80,000)

= $310,000

Redesigning product packaging does not relate to contribution to charitable trust or charitable purposes.

Thus, correct answer is

A. $310,000