Question

An international children's charity collects donations, which are used to buy clothing and toys for children in need. The charity records donations of cash and other items as Donations Revenue when received. a. Received $4,750 in cash and checks from a door-to-door campaign. b. Incurred and paid $1,500 cash for employee wages this month. c. Paid $1,050 cash on a short-term loan from the bank (ignore interest). d. Bought $5,200 worth of new toy supplies from a large toy manufacturer, paying $2,200 cash and signing a short-term note for $3,000. e. The manufacturer generously donated an additional $3,800 of toy supplies. Required: 1. Prepare journal entries for the above transactions, which occurred during a recent month. 2. Determine the charity's preliminary net income. Complete this question by entering your answers in the tabs below Required 1Required 2 Prepare journal entries for the above transactions, which occurred during a recent month. (If no entry is required fora transaction/event, select "No Journal Entry Required" in the first account field.)

1. Record the receipt of $4,750 in cash and checks from a door-to-door campaign.

2. Record the payment of $1,500 cash for employee wages this month.

3. Record the payment of $1,050 cash on a short-term loan from the bank (ignore interest).

4. Record the purchase of $5,200 worth of new toy supplies from a large toy manufacturer, paying $2,200 cash and signing a short-term note for $3,000.

5. Record the donation made by the manufacturer of an additional $3,800 of toy supplies.

Answer 1

1.

Journal

Date	Account title	Debit	Credit
a.	Cash	4,750
	Donation revenue		4,750
b	Wages expense	1,500
	Cash		1,500
c	Short term loan	1,050
	Cash		1,050
d	Toy supplies	5,200
	Cash		2,200
	Note payable		3,000
e	Toy supplies	3,800
	Donation revenue		3,800

2.

Net income = Donation revenue - Expenses

= (4,750 + 3,800) - 1,500

= $7,050

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