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27 November, 22:49

Turner Fund, a voluntary health and welfare organization funded by contributions from the general public, received unrestricted pledges of $300,000 during 20X4. It was estimated that 10 percent of these pledges would be uncollectible. By the end of 20X4, $240,000 of them had been collected. It was expected that $35,000 more would be collected in 20X5 and the balance of $25,000 would be written off as uncollectible. What amount should Turner include as contribution revenue in 20X4

a. $300,000

b. $275,000

c. $270,000

d. $240,00

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Answers (1)
  1. 28 November, 00:31
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    option (c) $270,000

    Explanation:

    Data provided in the question:

    Total pledges received = $300,000

    Allowance for doubtful accounts = 10% of the total

    Pledges collected by the end of the year = $240,000

    To be collected in the year 20X5 = $35,000

    Balance written off as uncollectible = $25,000

    Now,

    Contribution revenue in 20X4

    = Total pledges - Allowance for doubtful accounts

    = $300,000 - (10% of $300,000)

    = $300,000 - $30,000

    = $270,000

    Hence,

    The correct answer is option (c) $270,000
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