Question

Wilson Center is a private not-for-profit voluntary health and welfare entity. During 2017, it received unrestricted pledges of $600,000, 60 percent of which were payable in 2017, with the remainder payable in 2018 (for use in 2018). Officials estimate that 15 percent of all pledges will be uncollectible. How much should Wilson Center report as contribution revenue for 2017? In addition, a local social worker, earning $20 per hour working for the state government, contributed 600 hours of time to Wilson Center at no charge. Without these donated services, the organization would have hired an additional staff person. How should Wilson Center record the contributed service?

Answer 1

Answer:

Pledges                                           $600,000

Uncollectible Pledges at 15%         -$90,000

Net Pledge Balance                       $510,000

Pledges - 2017 at 60%                    $306,000

Unrestricted Net Asset - Contribution $306,000

   Account Titles                                     Debit              Credit

a)Contribution Receivable                     $360,000  

     Allowance for Uncollectible Pledges                  $54,000

     Unrestricted Net Asset - Contribution                  $306,000

b)Salary Expense (20 * 600)                    $12,000

Unrestricted Net Asset - Contribution                  $12,000