Only prepare the journal entries for transactions 1-15. 44. The Watson Foundation, a private not-
for-profit entity, starts 2024 with cash of $100,000; contributions receivable (net) of $200,000;
investments of $300,000; and land, buildings, and equipment (net) of $200,000. Net assets
without donor restrictions were reported as $400,000, the same figure as the net assets with
donor restrictions. Of the restricted net assets, $300,000 was purpose restricted, whereas the
other $100,000 had to be held permanently, although the subsequently earned income is without
restriction. Fifty percent of the purpose-restricted net assets had to be used to help pay for a new
building. The remainder was restricted to the payment of officer salaries. Donors made no
stipulations about the eventual reporting of buildings and other long-lived assets when acquired.
Watson has one program service (health care) and two supporting services (fundraising and
administrative). During the current year, Watson Foundation has the following transactions: (1)
Computes interest of $20,000 on the unrestricted contribution receivable. (2) Receives cash of
$100,000 from the contributions receivable and wrote off another $4,000 as uncollectible. (3)
Receives unrestricted cash donations of $180,000. (4) Receives $23,000 in cash that must be
spent for a particular type of office machine within the next year or the money must be returned.
(5) Pays salaries of $90,000. Of that amount, $15,000 came from restricted funds. The payment
was made to individuals doing health care work. (6) Spends the $23,000 in (4) for the
appropriate office machine. (7) Receives a cash gift of $12,000 that Watson must convey to
another specified charity. However, Watson has the right to give this money to a different
organization if officials so choose.
(8) Buys a building for $500,000 by signing a long-term note for $450,000 and using restricted
funds for the remainder. (9) Collects annual membership dues of $30,000. Individuals receive
substantial benefits from their memberships. By the end of the year, two-thirds of the time for the
average membership has passed. (10) Receives unrestricted income of $40,000 generated by net
assets that must be held permanently. (11) The board of directors of the Watson Foundation
votes to set aside $9,000 of its investments for emergency purposes. (12) Pays rent of $12,000
for the past month, advertising of $15,000, and utilities of $16,000. These were half for the
program service and one-fourth each for the two supporting services. (13) Receives an
unrestricted pledge of $200,000. Watson will collect the money in five years and does not expect
any part to be uncollectible. Present value at inception is $149,000, but interest for the year to
date is $6,000. (14) Computes depreciation of $40,000,60 percent for health care, 30 percent for
administrative, and 10 percent for fundraising. (15) Pays $15,000 in interest on the note signed in
(8). All of this cost is assumed to.
Only prepare the journal entries for transactions 1-15. 44. The Wats.pdf
1. Only prepare the journal entries for transactions 1-15. 44. The Watson Foundation, a private not-
for-profit entity, starts 2024 with cash of $100,000; contributions receivable (net) of $200,000;
investments of $300,000; and land, buildings, and equipment (net) of $200,000. Net assets
without donor restrictions were reported as $400,000, the same figure as the net assets with
donor restrictions. Of the restricted net assets, $300,000 was purpose restricted, whereas the
other $100,000 had to be held permanently, although the subsequently earned income is without
restriction. Fifty percent of the purpose-restricted net assets had to be used to help pay for a new
building. The remainder was restricted to the payment of officer salaries. Donors made no
stipulations about the eventual reporting of buildings and other long-lived assets when acquired.
Watson has one program service (health care) and two supporting services (fundraising and
administrative). During the current year, Watson Foundation has the following transactions: (1)
Computes interest of $20,000 on the unrestricted contribution receivable. (2) Receives cash of
$100,000 from the contributions receivable and wrote off another $4,000 as uncollectible. (3)
Receives unrestricted cash donations of $180,000. (4) Receives $23,000 in cash that must be
spent for a particular type of office machine within the next year or the money must be returned.
(5) Pays salaries of $90,000. Of that amount, $15,000 came from restricted funds. The payment
was made to individuals doing health care work. (6) Spends the $23,000 in (4) for the
appropriate office machine. (7) Receives a cash gift of $12,000 that Watson must convey to
another specified charity. However, Watson has the right to give this money to a different
organization if officials so choose.
(8) Buys a building for $500,000 by signing a long-term note for $450,000 and using restricted
funds for the remainder. (9) Collects annual membership dues of $30,000. Individuals receive
substantial benefits from their memberships. By the end of the year, two-thirds of the time for the
average membership has passed. (10) Receives unrestricted income of $40,000 generated by net
assets that must be held permanently. (11) The board of directors of the Watson Foundation
votes to set aside $9,000 of its investments for emergency purposes. (12) Pays rent of $12,000
for the past month, advertising of $15,000, and utilities of $16,000. These were half for the
program service and one-fourth each for the two supporting services. (13) Receives an
unrestricted pledge of $200,000. Watson will collect the money in five years and does not expect
any part to be uncollectible. Present value at inception is $149,000, but interest for the year to
date is $6,000. (14) Computes depreciation of $40,000,60 percent for health care, 30 percent for
administrative, and 10 percent for fundraising. (15) Pays $15,000 in interest on the note signed in
2. (8). All of this cost is assumed to be related to health care.
