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. Received $8,500 in cash and checks from a door-to-door campaign. Incurred and paid $3,000 cash for employee wages this month. Paid $3,420 cash on a short-term loan from the bank (ignore interest). Bought $4,920 worth of new toy supplies from a large toy manufacturer, paying $2,080 cash and signing a short-term note for $2,840. The manufacturer generously donated an additional $4,020 of toy supplies.
Required:
Prepare journal entries for the above transactions, which occurred during a recent month. Determine the charity’s preliminary net income.