Question: 1. The following transactions pertain to the activities of the Whitt Shakespeare Company (WSC), a not-for-profit entity. WSC begins the year 2015 with $10,000 in cash and $10,000 in unrestricted net assets.
Required: Prepare (1) journal entries for the following transactions; (2) A Statement of Activities for 2015; and (3) A Statement of Financial Position for 2015.
a. WSC receives a cash donation of $5,000 which must be used for a specific performance to be attended only by disadvantaged youths.
b. WSC gives the performance referred to in transaction a. WSC pays $5,000 to the actors and charges the expense to program expenses.
c. WSC conducts its annual fund-raising campaign at the beginning of the year and raises $50,000 to help meet its program and other expenses. WSC expects to collect 98% of these pledges in cash.
d. The state council on the arts gives WSC a grant of $20,000 to be used only for specific performances for senior citizens who reside in government supported housing.
e. Cort Beynon, a local attorney, donates 40 hours of his time to WSC drawing up contracts for the actors. He also donates 20 hours of time as an usher. He normally charges $200 an hour for his legal services. WSC would have hired an attorney and an usher to do this work if Mr. Beynon had not volunteered his time.
f. Jace Beynon donates common stock to WSC, stipulating that it be placed in a fund that will be maintained in perpetuity. At the time of the gift, the stock has a fair value of $20,000. Gains and dividends from the stock may be used to support current programs.
g. During 2015, WSC collects $48,000 against the pledges and writes off $1,000 of the pledges as uncollectible.
h. When WSC closes its books at the end of the year, the stock in transaction f has a fair value of $21,000.