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    Accounting for Nonprofit versus for-profit expenditures

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    1. Prepare, side by side, the correct journal entry for the identical transaction:
    a. once for a nonprofit entity
    b. once for a for-profit company
    2. Include notes for each transaction

    Transaction 1: Assume a nonprofit has a restricted fund for capital asset purchases. Compare the journal entries for the cash purchase of a $10,000 computer by the nonprofit, to how the journal entry would look for this for-profit.

    Transaction 2: Assume that a nonprofit has a need for $80,000 for a particular new marketing expenditure, and a for-profit entity needs to raise an additional $80,000 to pay for some unanticipated marketing expenses. How would the journal entities look at the acquisition of the funds and the subsequent spending of the funds?

    Transaction 3: The for-profit entity sells $120,000 with net 30-day terms, while the nonprofit entity has a fund raising drive for which they receive pledges of $120,000. How do the two journal entries look?

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    https://brainmass.com/business/accounting/accounting-for-nonprofit-versus-for-profit-expenditures-534472

    Solution Preview

    Transaction 1: Assume a nonprofit has a restricted fund for capital asset purchases. Compare the journal entries for the cash purchase of a $10,000 computer by the nonprofit, to how the journal entry would look for this for-profit.

    a. For a nonprofit entity
    Capital Fund:
    Dr: Computer $10,000
    Cr: Cash $10,000
    Purchased Computer from the restricted fund for capital asset purchases

    b. for a for-profit company:
    Dr: Computer $10,000
    Cr: Cash $10,000
    Purchased Computer ...

    Solution Summary

    Ex. Purchased Computer from the restricted fund for capital asset purchases
    a. For a nonprofit entity
    Capital Fund:
    Dr: Computer $10,000
    Cr: Cash $10,000

    b. for a for-profit company:
    Dr: Computer $10,000
    Cr: Cash $10,000

    $2.19