Journal Entries And Type Of Fund For Each Entry †Free Samples

Question: Discuss about the Journal Entries And Type Of Fund For Each Entry. Answer: Journal entries and type of fund for each entry to be made: Serial Number Particulars Debit amount (in $) Credit amount (in $) 1 Cash Account..Dr To Revenues from Contributions Account 30,000 30,000 2 Resources released from Restriction AccountDr To Cash Account 21,000 21,000 3 Equipment AccountDr To Resources released from Restriction Account 21,000 21,000 4 Depreciation Expense Account...Dr To Accumulated Depreciation Account 7,000 (21,000/3) 7,000 (21,000/3) Based on the provided scenario, four journal entries have been passed in the context of Discovery Barn, which is a not-for-profit centre for children. In accounting, there are two types of funds, which include restricted and unrestricted funds. In the words of Granof, Khumawala Smith (2016), a restricted fund is a monetary reserve, which could be used only for particular purposes. With the help of restricted funds, reassurance is provided to donors regarding their use of contributions in a way they are selected. On the other hand, unrestricted fund is a donation, which a non-profit organisation might utilise for any purpose. The first two journal entries made belong to the restricted fund category. This is because the fund is designated explicitly for the acquisition of computers. In addition, it could be classified further as a temporarily restricted fund, since the organisation could not purchase any other asset from the contributions received. Hence, it is to be used for a specific purpose for a particular timeframe. For the second entry, the organisation has made a purchase of computers amounting to $21,000 in the same year. This is treated as restricted fund as well, since the resources are released from restrictions in the form of cash (Hillman Kindschy, 2018). On the contrary, the last two journal entries fall under the unrestricted fund category. This is because the desired equipment is purchased and the amount received from contributions is released. Finally, the depreciation expense could not be controlled, since the value of the equipment would fall with the passage of time and it has economic life of three years. References: Granof, M. H., Khumawala, S. B., Smith, D. L. (2016).Government and Not-for-profit Accounting, Binder Ready Version: Concepts and Practices. John Wiley Sons. Hillman, N., Kindschy, A. (2018). The Finance Conundrum for Higher Education. InBuilding Capacity in Institutional Research and Decision Support in Higher Education(pp. 113-132). Springer, Cham.