Question

A not-for-profit organization received unrestricted pledges of $200,000, and believes based on past experience that 95% of them will be paid. what entry should be made to record the pledges?

a. none of the other options are correct.
b. debit credit cash $190,000 donation revenue $190,000
c. debit credit pledges receivable $190,000
d. donation revenue $190,000

Answer 1

The correct entry to record the pledges would be to debit Pledges Receivable $190,000.

Step-by-step explanation:

The correct entry to record the pledges would be option C: debit Pledges Receivable $190,000.

When an organization receives pledges, it records them as Pledges Receivable on the balance sheet. Since the organization believes that 95% of the pledges will be paid, it should only recognize the amount that it expects to receive, which is $190,000 (95% of $200,000).

The options A, B, and D are incorrect because they do not properly account for the expected collectability of the pledges.