Acct 5102 W
Codification Research System Written Assignment
Engagement Letter for Accounting Services:
February 19th, 2015
This letter is meant to state the responsibility of services that will be provided to your organization, City of Lakes, a public non-profit:
The services provided to your organization consist of a Summary of General Accepted Accounting Procedures (GAAP). This will outline the basic principles of GAAP that relates to public non-profits and how it may differ from for-profit businesses. Following, will be a basic overview of Accounting Practices that will help the reader gain insight of basic accounting principles. The goal of the section is to enable the individual to utilize the foundation when working …show more content…
Both of these restrictions (purpose and time) result in recording the contribution as temporarily restricted- unlike the earlier journal entry when it was unrestricted (FASB ASC 958-605-25-2). A debit to cash in recorded at $4,000, and a credit to temporarily restricted contributions is noted at $4,000. On January 1st 2002, City of Lakes will have the opportunity to turn the last $1,000 contribution from temporarily restricted to unrestricted contribution. To illustrate this example, a debit will be made to “Temporary Restricted Contribution of $1,000, and a credit will result of $1000 in the “Unrestricted Contribution Asset”. This enables the City of Lakes to utilize the contribution for any purpose since it has fulfilled the passage of time.
Entry 3: When a contribution is made with a condition, such as the case when Warren giving the City of Lakes $5,000 to start a new chess program, the fund is noted as a temporary restricted contribution. When such a program is started, and becomes an integral part of the organization’s mission, it can be considered a program service (FASB ASC 958-205-45-6). This in essence would result in a program service expense. The first journal entry would be to report the cash coming into the organization as a debit to “Cash” for $5,000, and a credit to “Temporary Restricted Contribution” of $5,000. To show the journal entry when the program is to