Assume that during Year 1, the entity receives a cash gift of $80,000. The donor specified that this money be invested in U.S. government bonds with the income to be used to help pay the salaries of the entity's employees. The gift was recorded as an increase in net assets with donor restrictions. The investments earned $5,000 during Year 1 and $7,000 during Year 2. The entity reported these amounts on the statement of activities as increases in net assets without donor restrictions. In both cases, the money was immediately expended for salaries, amounts that were recorded as expenses within net assets without donor restrictions. No other journal entries were made in connection with this income and the income earned. Required: a. What was the appropriate amount of net assets without donor restrictions to be reported at the end of Year 2? Net assets without donor restrictions to be reported b. What was the appropriate amount of expenses to be reported under net assets without donor restrictions for the year ending December 31, Year 2? Expenses to be reported c. What was the appropriate amount of net assets with donor restrictions to be reported at the end of Year 2?

Assume that during Year 1, the entity receives a cash gift of $80,000. The donor specified that this money be invested in U.S. government bonds with the income to be used to help pay the salaries of the entity's employees. The gift was recorded as an increase in net assets with donor restrictions. The investments earned $5,000 during Year 1 and $7,000 during Year 2. The entity reported these amounts on the statement of activities as increases in net assets without donor restrictions. In both cases, the money was immediately expended for salaries, amounts that were recorded as expenses within net assets without donor restrictions. No other journal entries were made in connection with this income and the income earned. Required: a. What was the appropriate amount of net assets without donor restrictions to be reported at the end of Year 2? Net assets without donor restrictions to be reported b. What was the appropriate amount of expenses to be reported under net assets without donor restrictions for the year ending December 31, Year 2? Expenses to be reported c. What was the appropriate amount of net assets with donor restrictions to be reported at the end of Year 2?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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