10–8.On January 1, 2015, a foundation made a pledge to pay $30,000 per year at t

Question

10–8.On January 1, 2015, a foundation made a pledge to pay $30,000 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, 2015, the first payment of $30,000 was received and paid to the researcher.

1.On the books of the Cancer Research Center, record the pledge on January 1 in the temporarily restricted asset class, assuming the appropriate discount rate is 5 percent on an annual basis. The appropriate discount factor is 4.33.

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2.Record the increase in the present value of the receivable in the temporarily restricted net asset class as of December 31.

3.Record the receipt of the first $30,000 on December 31 and the payment to the researcher. Indicate in which asset class (unrestricted, temporarily restricted) each account is recorded.

10-8. CANCER RESEARCH CENTER GENERAL JOURNAL Debits Credit 1 Contributions Receivable (30,000 x 4.33) 129,900 Contributions-Temporarily Restricted 129900 2 Contributions Receivable            Contributions-Temporarily Restricted 3 Cash Contributions-Receivable Reclassification From Temporarily Restricted Net Assets- Expiration of Time Restrictions Reclassification to Unrestricted Net Assets-                       Expiration of Time Restrictions (to record expiration of time restrictions) Research Expense: Salary Supplement Cash                    (All expenses are classified as unrestricted)

Explanation / Answer

2. Contributions Receivable                             Dr              6478.52        

                    Contributions-Temporarily Restricted                              6478.52

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