Will Wealth made three charitable donations in 2014. Each was for $500,000, howe

Question

Will Wealth made three charitable donations in 2014. Each was for $500,000, however they were made to three different organizations as follows:

1.   Will donated to a local voluntary health and welfare organization (VHWO), and indicated that the funds could be used as the VHO wanted.

2.   Will donated to a local private, not-for-profit university, designating the funds to be used for scholarships and student aid.

3.   Will donated to the local not-for-profit, nongovernmental hospital, designating the funds to be used for purchase of diagnostic equipment.

Required:

For each of the above three situations:

A.   Prepare the journal entry that each organization would prepare at the time of the contribution.

B.   Prepare the journal entry that each organization would prepare at the time of the subsequent spending of the funds. Assume that the spending is in accordance with any restrictions that Will placed on the donation.

Explanation / Answer

Entries in the books of VHWO Date Particulars Debit($) Credit($) A Bank a/c Dr. xxx      To Fund a/c xxx B Expense a/c Dr. xxx      To bank a/c xxx Entries in the books of University Date Particulars Debit($) Credit($) A Bank a/c Dr. xxx      To Fund a/c xxx B Student Scholarship a/c Dr. xxx      To bank a/c xxx Entries in the books of Hospital Date Particulars Debit($) Credit($) A Bank a/c Dr. xxx      To Fund a/c xxx B Equipment a/c Dr. xxx      To bank a/c xxx

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