In the current year, the not-for-profit organization Save the Butterflies Foundation received cash of $500 to be used as the Foundation wishes and $1,000 to be used for butterfly research. Save the Butterflies Foundation also received pledges of $700 that it can use as it wishes and $600 for its building fund. All pledges are expected to be received next year. How much would Save the Butterflies report as contributions with donor restrictions in the current year?

• A. $500.
• B. $1,000.
• C. $1,600.
• D. $1,200.

Answer: (C)

In nonprofit accounting, amounts are reported as contributions with donor restrictions when donors impose constraints on how the funds can be used or when they become available. Unrestricted contributions can be used for any purpose.

Here, the $1,000 cash is specifically restricted to butterfly research, and the $600 pledged for the building fund is restricted for that purpose. The $500 cash to be used as the Foundation wishes and the $700 pledge to be used as it wishes are unrestricted.

So the total reported as contributions with donor restrictions in the current year is $1,000 + $600 = $1,600.