Some, but not all, contributions of goods and services are given accounting recognition. In each of the following scenarios, an organization receives a contribution in kind. Prepare journal entries, as necessary, to give them accounting recognition. For each, tell why you made an entry or why you did not.
1. A local not-for-profit art museum receives advertising for its yearly benefit from radio station WLOU. The airtime would have cost the museum $1,000.
2. Volunteers for ''Breakfast on Bikes,'' a voluntary health and welfare organization, deliver hot meals to the elderly three times a week. Each of the ten volunteers works about six hours per week. All of the volunteers have permanent jobs with pay averaging $16.10 an hour.
3. Lynn Simms, a local CPA, maintains the books and records of her church. Although her normal billing rate is $60 per hour, she accepts no payment from the church. She works on church matters approximately four hours a week.
4. A construction company allows a not-for-profit community association to use its bulldozer at no cost to clear land for a new baseball park. If the association had to rent the bulldozer it would have incurred costs of $1,400.© BrainMass Inc. brainmass.com June 3, 2020, 10:13 pm ad1c9bdddf
1. A journal entry is needed from Financial Accounting Statement (FAS) 116 because these are specialty services that would need to be purchased if they were not donated.
DR Advertising $1000
CR Contribution Revenue ...
This response provides guidelines to prepare journal entries to contributions of goods and services accounting recognition in non-profit organizations.