Question

INVOLVE was incorporated as a not-for-profit voluntary health and welfare organization on January 1, 2020. During the fiscal year ended December 31, 2020, the following transactions occurred. A business donated rent-free office space to the organization that would normally rent for $35,600 a year. A fund drive raised $188,000 in cash and $106,000 in pledges that will be paid within one year. A state government grant of $156,000 was received for program operating costs related to public health education. Salaries and fringe benefits paid during the year amounted to $209,160. At year-end, an additional $16,600 of salaries and fringe benefits were accrued. A donor pledged $106,000 for construction of a new building, payable over five fiscal years, commencing in 2022. The discounted value of the pledge is expected to be $94,860. Office equipment was purchased for $12,600. The useful life of the equipment is estimated to be five years. Office furniture with a fair value of $10,200 was donated by a local office supply company. The furniture has an estimated useful life of 10 years. Furniture and equipment are considered net assets without donor restrictions by INVOLVE. Telephone expense for the year was $5,800, printing and postage expense was $12,600 for the year, utilities for the year were $8,900 and supplies expense was $4,900 for the year. At year-end, an immaterial amount of supplies remained on hand and the balance in accounts payable was $4,200. Volunteers contributed $15,600 of time to help with answering the phones, mailing materials, and various other clerical activities. It is estimated that 90 percent of the pledges made for the 2021 year will be collected. Depreciation expense is recorded for the full year on the assets recorded in item 5. All expenses were allocated to program services and support services in the following percentages: public health education, 35 percent; community service, 30 percent; management and general, 20 percent; and fund-raising, 15 percent. Net assets were released to reflect satisfaction of state grant requirements that the grant resources be used for public health education program purposes. All nominal accounts were closed to the appropriate net asset accounts.

Prepare a schedule of expenses by nature and function for the year ended December 31, 2020.

Answer 1

INVOLVE
Income and Expenditure Account for year ended December, 2020
Income	Amount
Collection from Fund Drive in cash	1,88,000
Collection from Fund Drive in pledge in one year	1,06,000
Government Grant received for public health education	1,56,000
Pledge for building received	94,860
( Value 106000 in 2022)
Furniture received in donation	10,200
Contribution from Voluteers	15,600
Total Income	5,70,660
Expenditure	Amount
Salaries of fringe benefits paid	2,09,160
Salaries of fringe benefits accrued	16,600
Depreciation on Equipments	2,520
Depreciation on Furniture	1,020
Telephone expenses	5,800
Printing and postage expenses	12,600
Utilities paid	8,900
Supplies expenses	4,900
Accounts payable	4,200
Provision for unrecoverable pledges	10,600
Total Expenses	2,76,300
Net amount available for spending	2,94,360
Expenditure allocated to	Amount
Public Health Education	1,03,026
Community Service	88,308
Management and General	58,872
Fund raising	44,154
Total expenses	2,94,360