(Journal entries using classifications of net assets) The Mon Elisa Museum of Fine Arts is an… 1 answer below »


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(Journal entries using classifications of net assets) The Mon Elisa Museum of Fine Arts is an NFPO that derives most of its resources from wealthy patrons. Mon Elisa has recently changed its accounting system to eliminate the use of separate funds. All journal entries are made so as to indicate which of the three net asset classifications are affected. The following transactions and events occurred during 2013. Prepare journal entries for these transactions and events, and identify the affected classification(s) of net assets.

1. Cash of $40,000 was received from donors, who stated that it could be used for any purpose desired by the museum.

2. A donor gave the museum $10,000, stipulating that the money be used only to acquire fine examples of Weller Dickensware pottery.

3. Elias Gotbucks sent Mon Elisa a letter, stating that he would donate $15,000 to the museum to purchase examples of Sara Dawn’s quilt work, provided the museum conducted a special campaign that raised at least $25,000 to buy additional examples.

4. The museum spent $4,000 to acquire a fine Weller Dickensware vase. Assume that Mon Elisa capitalizes its pottery collection.

5. Mon Elisa contacted wealthy patrons to raise funds to buy Sara Dawn’s quilt work. It obtained $30,000 in pledges, all likely to be collected. Mon Elisa then wrote to Elias Gotbucks, advising him it had raised $30,000.

6. Attorney Ted Floot donated his services to the museum. He spent 4 hours on museum legal matters and 3 hours as a salesperson in the museum shop. Mr. Floot bills $250 an hour when he works as an attorney.

7. During the year, Mon Elisa received several art works having a total fair value of $45,000. Mon Elisa does not capitalize its art collection, but it holds the art for public exhibition, protects and preserves the works, and uses the proceeds of any sales to acquire other works for its collection.

8. A wealthy patron donated The Portrait of Samantha , which had a fair value of $6,000, to the museum. The museum accepted the gift with the understanding that it would be sold at auction and the proceeds used for any purpose the museum wished.

9. Another wealthy patron entered into an irrevocable charitable remainder trust with Mon Elisa, whereby the patron’s wife would receive annual distributions until her death. At that time, Mon Elisa would receive the remaining assets, to be used to augment Mon Elisa’s art collection. The patron’s bank will administer the trust. Mon Elisa’s actuary estimated the fair value of the gift at $95,000.