WEEK 05 ASSIGNMENT
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week_05_assignment_nonprofit_accounting_m.docxComplete the following problems and exercises, showing all work and submit in the classroom.
1. Classification of Revenues/Support and Expenses. For each of the independent transactions listed below, indicate which of the listed revenue or contribution classifications apply by choosing one or more of the letters from the listed items. Choose all that apply.
Transaction
i. A museum gift shop sold prints of famous paintings.
ii. At the end of the year a donor agreed to contribute $400,000 to a local artists’ fund if the museum raised a matching amount in the first quarter of the upcoming year.
iii. A registered nurse volunteered 10 hours a week to a local agency for disabled persons.
iv. A donor contributed $1 million to a not-for-prof it hospital for a new clinic.
v. An NFP art association hosted its annual art exhibition for the association's major contributors.
vi. A donor contributed securities valued at $10 million to be permanently invested. Earnings thereon are stipulated by the donor to be used for eye research.
vii. A local computer store donated computers for children's use at an NFP hands-on children's museum.
viii. A local PTA received cash contributions of $2,000 to be used for its operating activities.
Revenue and Contribution Classifications
a. Revenue
b. Contributions – Unrestriced
c. Contributions – Temporarily Restricted
d. Contribution - Permanently Restricted
e. None of the above.
2. Recording and Reporting Transactions. INVOLVE was incorporated as a not-for-prof it voluntary health and welfare organization on January 1, 2017. During the fiscal year ended December 31, 2017, the following transactions occurred.
· A business donated rent-free office space to the organization that would normally rent for $35,000 a year.
· A fund drive raised $185,000 in cash and $100,000 in pledges that will be paid within one year. A state government grant of $150,000 was received for program operating costs related to public health education.
· Salaries and fringe benefits paid during the year amounted to $208,560. At year-end, an additional $16,000 of salaries and fringe benefits were accrued.
· A donor pledged $100,000 for construction of a new building payable over the following five fiscal years, commencing in 2019. The discounted value of the pledge is expected to be $94,260. Office equipment was purchased for $12,000. The useful life of the equipment is estimated to be five years. Office furniture with a fair value of $9,600 was donated by a local office supply company. The furniture has an estimated useful life of 10 years. Furniture and equipment are considered unrestricted net assets by INVOLVE.
· Telephone expense for the year was $5,200, printing and postage expense was $12,000 for the year, utilities for the year were $8,300, and supplies expense was $4,300 for the year. At year-end, an immaterial amount of supplies remained on hand and the balance in accounts payable was $3,600.
· Volunteers contributed $15,000 of time to help with answering the phones, mailing materials, and various other clerical activities.
· It is estimated that 90 percent all of the pledges made for the 2018 year will be collected. Depreciation expense is recorded for the full year on the assets recorded in item 5.
· Salaries and wages were allocated to program services and support services in the following percentages: public health education, 35 percent; community service, 30 percent; management and general, 20 percent; and fund-raising, 15 percent. All other expenses were allocated in the following percentages: public health education, 35 percent; community service, 20 percent; management and general, 25 percent; and fund- raising, 20 percent.
· Net assets were released to reflect satisfaction of state grant requirements that the grant resources be used for program purposes.
· All nominal accounts were closed to the appropriate net asset accounts.
Using this information
a. Make all necessary journal entries to record these transactions. Expense transactions should be initially recorded by object classification; in entry 10 expenses will be allocated to functions.
b. Prepare a statement of activities for the year ended December 31, 2017.
c. Prepare a statement of financial position for the year ended December 31, 2017.
d. Prepare a statement of cash flows for the year ended December 31, 2017.
e. Prepare a statement of functional expenses for the year ended December 31, 2017.
3. Various Unrelated Transactions. Following are several unrelated transactions involving a university.
· In fiscal year 2017, the university was notified by the federal government that in 2018 it would receive a $500,000 grant for wetlands research.
· The university received a $500,000 endowment.
· For the fiscal year, the university recorded $2,500,000 in tuition and fees revenue. Cash refunds of $325,000 were given.
· The university provided $12,600 in tuition waivers for students with outstanding academic performance.
· During the year, the university constructed a new street, to allow for the expansion of its student housing efforts. The cost of the street was $1,980,000.
· The biology department spent $25,000 on wetland research.
· At year-end, $1,670 of estimated uncollectible tuition and fees was recorded.
Using this information
a. Prepare journal entries to record the foregoing transactions, assuming the university is a private institution.
b.
Prepare journal entries to record the foregoing transactions, assuming the university is a public institution.
4. Financial Statements - Public College. The following balances come from the trial balance of Wilson State College as of the end of the 2017 fiscal year.
|
WILSON STATE COLLEGE Pre-closing Trial Balance June 30, 2017 (000s omitted) |
||
|
|
Debits |
Credits |
|
Cash and Cash Equivalents |
$3,278 |
|
|
Investments |
$29,387 |
|
|
Accounts Receivable |
$1,957 |
|
|
Allowance for Uncollectible Receivables |
|
$137 |
|
Due from State |
$79,626 |
|
|
Inventories |
$869 |
|
|
Cash and Cash Equivalents--Restricted |
$6,716 |
|
|
Investments--Restricted |
$71,883 |
|
|
Depreciable Capital Assets |
$184,620 |
|
|
Accumulated Depreciation |
|
$28,850 |
|
Nondepreciable Assets |
$89,481 |
|
|
Accounts Payable |
|
$2,306 |
|
Accrued Liabilities |
|
$2,039 |
|
Unearned Revenue |
|
$13,789 |
|
Compensated Absences -Current Portion |
|
$1,538 |
|
Bonds Payable |
|
$92,116 |
|
Compensated Absences |
|
$37,662 |
|
Net Position--Net Investment in Capital Assets |
|
$158,715 |
|
Net Position--Restricted for Debt Service--Expendable |
|
$1,157 |
|
Net Position--Restricted for Capital Projects--Expendable |
|
$49,272 |
|
Net Position – Restricted for Endowment--Nonexpendable |
|
$39,959 |
|
Net Position--Unrestricted |
|
$36,559 |
|
Tuition and Fees |
|
$30,095 |
|
Tuition and Fees Discount and Allowances |
$7,565 |
|
|
Grants and Contracts Revenue |
|
$18,196 |
|
Auxiliary Enterprise Sales |
|
$14,595 |
|
Investment Income |
|
$1,745 |
|
State Appropriations |
|
$44,894 |
|
Capital Appropriations |
|
$12,785 |
|
Institutional Support Expenses |
$26,268 |
|
|
Academic Support Expenses |
$58,940 |
|
|
Scholarships and Fellowships Expense |
$7,664 |
|
|
Depreciation Expense |
$5,580 |
|
|
Interest Expense |
$378 |
|
|
Auxiliary Enterprise Expenses |
$12,197 |
|
|
Totals |
$586,409 |
$586,406 |
|
Information on Cash and Cash Equivalents Activity |
|
|
|
Beginning Cash Balance |
$8,067 |
|
|
Received Tuition and Fees (net) |
$23,609 |
|
|
Received Grants and Contracts |
$12,940 |
|
|
Received from Auxiliary Enterprises |
$13,765 |
|
|
Payments to Employees |
$58,220 |
|
|
Payments to Vendors |
$21,711 |
|
|
Payments to Students for Scholarships and Fellowships |
$7,664 |
|
|
Received State Appropriations |
39,894 |
|
|
Received Capital Appropriations |
20,540 |
|
|
Purchase of Capital Assets |
20,634 |
|
|
Interest Paid on Debt |
2,095 |
|
|
Interest Income |
1,503 |
|
Using this information
a. Prepare a statement of revenues, expenses, and changes in net position for the year ended June 30, 2017, in good form. See Illustrations 152 and 76; however, display expenses using functional classifications as shown in Illustration 156.
b. Prepare a statement of net position as of June 30, 2017, in good form. For the period, net position restricted for capital projects increased by $3,000, and net position restricted for debt service increased by $150; all bonded debt relates to capital assets. See Illustration 151.
c. Prepare a statement of cash flows for the year ended June 30, 2017. Information on changes in assets and liabilities is as follows: Accounts Receivable (net) increased by $2,551; Due from State decreased by $14,842; Inventories increased by $23; Accounts Payable and Accrued Liabilities increased by $1,962; and Unearned Revenue decreased by $1,763. See Illustration 153
GRADING RUBIC:
Part 1a: Indicates Which of the Listed Revenue or Contribution Classifications Apply for Each of the Independent Transactions by Choosing One or More of the Letters from the Listed Items
Total: 0.75
Part 2a: Prepares the Journal Entries to Record the Transactions of INVOLVE a Not-for-profit Voluntary Health and Welfare Organization
Total: 0.75
Part 2b: Prepares a Statement of Activities for the Year Ending December 31, 2017, for INVOLVE, a Not-for-profit Voluntary Health and Welfare Organization
Total: 0.75
Part 2c: Prepares a Statement of Financial Position for the Year Ending December 31, 2017, for INVOLVE, a Not-for-profit Voluntary Health and Welfare Organization
Total: 0.75
Part 2d: Prepares a Statement of Cash Flows for the Year Ending December 31, 2017, for INVOLVE, a Not-for-profit Voluntary Health and Welfare Organization
Total: 0.75
Part 2e: Prepares a Statement of Functional Expenses for the Year ending December 31, 2017 for INVOLVE, a Not-for-profit Voluntary Health and Welfare Organization
Total: 0.75
Part 3a: Prepares Journal Entries to Record the Foregoing Transactions, Assuming the University is a Private Institution
Total: 0.70
Part 3b: Prepares Journal Entries to Record the Foregoing Transactions, Assuming the University is a Public Institution
Total: 0.70
Part 4a: Prepares a Statement of Revenues, Expenses, and Changes in Net Position for the Year Ended June 30, 2017, for Wilson State College
Total: 0.70
Part 4b: Prepares a Statement of Net Position as of June 30, 2017, in Good Form for Wilson State College
Total: 0.70
art 4c: Prepares a Statement of Cash Flows for the Year Ending June 30, 2017, for Wilson State College
Total: 0.70
