XYZ Is a Local Charity That Commenced Operations on January

question 11

Essay

XYZ is a local charity that commenced operations on January 1, 2017. XYZ uses an encumbrance system to manage costs. For the following partial data provided, prepare the journal entry to record that transaction. In addition, specify which fund or funds must be used to record the entry.
a) Revenue deferred earlier in the year in the amount of $5,000 was recognized.
b) Pledges receivable in the amount of $10,000 were collected in full.
c) Accounts payable and wages payable amounting to $10,000 and $5,000 were paid.
d) Government grants amounted to $50,000, half of which was received. The balance is expected by late 2018. The grants may be applied to any of the organization's programs.
e) Total Wage costs amounted to $60,000 which breaks down as follows: $$\begin{array} { | l | l | } \hline \text { Program A } & \$ 40,000 \\\hline \text { Program B } & \$ 10,000 \\\hline \text { Administration } & \$ 10,000 \\\hline\end{array}$$ 25% of these expenses are still payable at the end of 2017.
f) A wealthy local businessman donated $100,000 to be held in endowment, with the interest earned to be unrestricted.
g) The investments in an endowment fund earned interest in the amount $3,000.
h) Amortization expense for the year amounted to $10,000.

---

Definitions:

Total Profit

The entire financial gain obtained by a business or an individual after all expenses and costs have been deducted from the total revenue.

Development Requirement

Conditions that must be met for a region or country to achieve economic growth, including infrastructure, education, and healthcare.

Inflation Rate

The percentage increase in the price level of goods and services in an economy over a period of time, typically measured on an annual basis.

Government Control

Government control refers to the mechanisms, regulations, and actions taken by a government to oversee, direct, or manage its country's economic activities, industries, or individual behavior.