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allocation of expenses journal entries the caring clinic a vhwo conducts two program 615156

Allocation of expenses, journal entries. The Caring Clinic, a VHWO, conducts two programs: Alcohol and Drug Abuse and Outreach to Teens. It has the typical supporting services of management and fund raising. Expense accounts from the preallocation trial balances as of December 31, 20X7, are as follows:

 

Funded by

Funded by

 
 

Unrestricted

Donor-Restricted

 

 

Resources

Resources

Total

Salaries and Payroll Taxes          

63,000

23,000

86,000

Telephone and Miscellaneous Expenses

10,000

2,000

12,000

Nursing and Medical Fees        

70,000

50,000

120,000

Educational Seminars Expense      

46,000

20,000

66,000

Research Expense              

137,000

16,000

153,000

Medical Supplies Expense          

65,000

22,000

87,000

Rent Expense                  

 

10,000

10,000

Interest Expense on Equipment Mortgage

4,000

 

4,000

Depreciation Expense            

 

20,000

20,000

Provision for Uncollectible Pledges    

26,000

 

26,000

Totals                    

421,000

163,000

584,000

In preparation for the allocation of expenses to programs and supporting services, a study was conducted to determine an equitable manner for assigning each expense. The study resulted in the following table for percentage allocations.

Percentage of Allocations

   

Programs

Supporting Services

Expenses to Be Allocated

 

Outreach
to Teens

Management

Fund
Raising

All expenses (other than depreciation) financed by

 

 

 

 

donor-restricted contributions                  

60%

40%

   

Expenses financed by unrestricted resources:

 

 

 

 

Salaries and payroll taxes                  

30

20

30%

20%

Telephone and miscellaneous                  

20

20

15

45

Nursing and medical fees                  

70

30

   

Educational seminars                      

30

60

 

10

Research

60

40

   

Medical supplies

90

10

   

Equipment-related expenses:

 

     

Interest

50

10

30

10

Depreciation

50

10

30

10

1. Using a total of allocable expenses financed by donor-restricted resources, prepare a journal entry to assign those expenses to the programs.

2. With the following format, prepare a schedule to show the assignment of the allocable expenses financed by unrestricted resources to the various programs and supporting services, using the percentages provided by the problem.

Caring Clinic Allocation of Expenses
For Year Ended December 31, 20X7

   

Programs

 

Supporting Services

 

Expense

Total

Alcohol and

Outreach

 

Fund

Allocated

Amount

Drug Abuse

to Teens

Management

Raising

             

3. Using the schedule from requirement 2, prepare a journal entry to record the allocation and closing of expenses financed by unrestricted resources.

4. Prepare a journal entry to assign plant-related expenses to programs and support services.

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