11-5 ARCH began the year with the following balances (shown in alphabetical orde

Question

11-5 ARCH began the year with the following balances (shown in alphabetical order) in their accounts:

Accounts Payable                                          $27,000

Accounts Receivable, net                             26,000

Cash                                                               10,000

Inventory                                                       25,000

Notes Payable                                                270,000

Permanently Restricted Net Assets            100,000

Pledges Receivable                                       350,000

Property, Plant, and Equipment, net         350,000

Temporarily Restricted Net Assets            30,000

Unrestricted Net Assets                               302,000

Wages Payable                                              32,000

Record this information and the transactions from Problem 11-14 in a worksheet similar to Exhibit 11-7.

(Problem 11-14) The American Research Council of Humanity (ARCH) had the following financial events during the current year:                                                      

1. January 12. Received a $300,000 payment from a pledge made last year.
2. February 4. Placed an order for new cubicle partitions with five-year useful lives, for $15,000. ARCH uses straight-line depreciation. Payment was not yet made, and the partitions have not yet been delivered.                                                                      

3. March 1. Paid out a $50,000 grant to the Governmental Archeological Research Committee for History (GARCH). This was a new grant made in the current fiscal year.
4. May 29. Paid a $5,000 deposit for the partitions ordered on February 4.
5. June 12. Collected $80,000 in new donations.
6. September 1. ARCH bought $60,000 of books it has sponsored in the past to sell in its online bookstore. They paid half now, and still owe the other half, to be paid at the end of the year. ARCH has budgeted to sell the books for $100,000 total.            

7. October 15. The partitions ordered on February 4 arrived, and ARCH paid for the balance owed.                                                                                                               

8. November 10. ARCH borrowed $75,000 from its bank on a note payable.             

9. December 5. ARCH repaid $25,000 on the note payable, and also $3,000 in interest expenses.                                                                                                              

10. December 28. ARCH paid its employees $75,000 of wages in cash for the year, $70,000 of which was for the current year and $5,000 of which was for the outstanding balance owed. Employees earned $90,000 in wages for the year.           

11. December 31. Book sales from the Internet book-store totaled $ 110,000, and the cost of the books sold was $58,000. ARCH has not collected $12,000 of the sales. The balance owed for the inventory was paid.                                                                      

12. ARCH expects that of the $12,000 not collected to date, it will collect $10,000.   

13. December 31. Depreciation on ARCH’s building for the year is $40,000.    

Record these transactions and any other required adjusting entries by showing their impact on the fundamental equation of accounting or journal entries.

Explanation / Answer

Journal Entries for (Problem 11-14) Sl. No. Date Particulars Dr. ($) Cr.($) 1 Jan 12, Cash 300,000.00 Pledge Receivables 300,000.00 2 March 1, Grant to GARCH 50,000.00 Cash 50,000.00 3 May 29, Advance Payments 5,000.00 Cash 5,000.00 4 June 12, Cash 80,000.00 Donations Received 80,000.00 5 Sep 1, Inventories 60,000.00 Cash 30,000.00 Accounts Payable 30,000.00 6 Oct 15, Cubical Partitions 15,000.00 Cash 10,000.00 Advance Payments 5,000.00 7 Nov 10, Cash 75,000.00 Notes Payable 75,000.00 8 Dec 5, Notes Payable 25,000.00 Interest Expenses 3,000.00 Cash 28,000.00 9 Dec 28, Wages 90,000.00 Wages Payable 5,000.00 Cash 75,000.00 Wages Payable 20,000.00 10 Dec 31, Cash 98,000.00 Accounts Receivables 12,000.00 Inventory 58,000.00 Profits form Book Sales 52,000.00 Bad Debts 10,000.00 Accounts Receivables 10,000.00 Depreciation 40,000.00 Building 40,000.00 Total 868,000.00 868,000.00 Trial Balances combining (Problem 11-5) and (Problem 11-15) Particulars Dr. ($) Pariculars Cr.($) Accounts Receivables 28,000.00 Accounts Payable 57,000.00 Cash 365,000.00 Notes Payable 320,000.00 Inventory 27,000.00 Wages Payable 47,000.00 Pledge Receivables 50,000.00 Profits from Books Sales 52,000.00 Property, Plant, and Equipment 310,000.00 Donations Received 80,000.00 Depreciation 40,000.00 Permanently Restricted Net Assets 100,000.00 Bed Debts 10,000.00 Temporarily Restricted Net Assets 30,000.00 Wages 90,000.00 Unrestricted Net Assets 302,000.00 Interest Expenses 3,000.00 Cubical Partitions 15,000.00 Grant to GARCH 50,000.00 Total 988,000.00 Total 988,000.00

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