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Accounting Tutorial › Without Fund Accounting

Just before the 1999 year-end someone pledged to give SpringTime $100, with no restrictions, and paid the amount in January before the prior year treasurer prepared the 1999 statements. Looking at the opening balances we just posted, we can see that the $100 amount was set up by the prior treasurer as a contribution receivable at December 31, 1999.

Paragraph 4420.03 of the CICA Handbook requires that contributions receivable be recorded so long as the amount can be reasonably estimated and collection is reasonably assured. Obviously both of these requirements were met at the time the treasurer prepared the statements and so he was right to record the pledge receivable and the revenue in 1999.

As the pledge was received in the 2000 year, we will have to make an adjusting entry, as currently the amount is shown as revenue of the year 2000, in the cash transactions we posted. We will make the following entry to remove the receipt of the pledge from revenue and eliminate the contribution receivable that was set up:

  dr cr
Unrestricted contributions 100  
Contributions receivable   100

In 2000, the Board decided the money should be used for capital expenses. It is not really necessary for us to make a journal entry as we have no capital fund. We could, if we wanted to, set up separate accounts for the components of net assets: eg. externally restricted, unrestricted, internally restricted etc., but we won’t at this time.

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