2 a small town in a rural area has an organization that serves the local community w 4307294

2 a small town in a rural area has an organization that serves the local community w 4307294

2) A small town in a rural area has an organization that serves the local community when there is a financial need. Among the services they provide is free groceries, clothes and furniture, along with transportation to doctors' appointments when the doctor is out of town. This voluntary health and welfare organization (VHWO) accepts most donations of goods, all donations of cash, and has developed a relationship with the local grocer who helps them obtain needed food items. The VHO has one paid administrator who tracks and coordinates the donations, performs application reviews to determine eligibility, and schedules transportation for those in need. Volunteers unload and pack grocery items, sort clothes and furniture, and drive those who need transportation. Gasoline costs are reimbursed to the driver based on mileage. The local CPA provides bookkeeping and tax services for free, and designates 90% of expenses incurred to community services and 10% to management and general.

The VHWO had the following transactions in 2011:

1.The administrator is paid $11,000 salary.

2.The accountant services are valued at $6,000 based on their normal billable rate.

3.The landlord of the building they use for their operations has waived their rent and provided the bill of $6,000 for their records. The VHWO paid utilities and property taxes of $3,000.

4.Office furniture was donated with an estimated fair value of $9,400.

5.The VHWO received cash donations of $20,000, $5,000 of which was an unpaid pledge from the prior year. The beginning pledges receivable balance was $6,000, and no amount had previously been estimated to be uncollectible. The prior year balance will now be written off. In addition, $12,000 was pledged to be donated in 2012. Based on recent history, the VHWO knows that 10% of the new pledges will not be collected.

Required:

Prepare the journal entries for the transactions noted above.

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