required: . What was the appropriate amount of net assets without donor restrictions at the end of Year 1?
required: . What was the appropriate amount of net assets without donor restrictions at the end of Year 1?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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I need help with part a
![[The following information applies to the questions displayed below.]
For a number of years, a private not-for-profit entity has been preparing financial statements that do not necessarily
conform to U.S. generally accepted accounting principles. At the end of the most recent year (Year 2), those financial
statements show total assets of $900,00O, total liabilities of $100,000, net assets without donor restriction of $400,000,
and net assets with donor restrictions of $400,000. This last category is composed of $300,000 in net assets with
purpose restrictions and $100,000 in net assets that must be permanently held. At the end of Year 1, financial statements
show total assets of $700,000, total liabilities of $60,000, net assets without donor restriction of $340,000, and net assets
with donor restrictions of $300,000. This last category is composed of $220,000 in net assets with purpose restrictions
and $80,000 in net assets that must be permanently held. Total expenses for Year 2 were $500,000 and reported under
net assets without donor restrictions. Each part that follows should be viewed as an independent situation.
Assume that this entity charges its members $100,000 each year (Year 1 and Year 2). The members get nothing in return for their dues.
The entity has consistently recorded the cash collections as an increase in cash and an increase in exchange revenues under net
assets without donor restrictions. The board of trustees has had a policy for several years that 10 percent of the money collected be
set aside and invested with the money held for emergency purposes. Cash is decreased and "investments held for emergencies" are
increased with each purchase.
Required:
a. What was the appropriate amount of net assets without donor restrictions at the end of Year 1?
Net assets without donor restrictions at the end of Year 1
$
340,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd3619f59-07ab-4931-baf8-4870aae69b7c%2F3cc53236-ebc6-4b02-ab03-968babf46213%2F14l4m5_processed.png&w=3840&q=75)
Transcribed Image Text:[The following information applies to the questions displayed below.]
For a number of years, a private not-for-profit entity has been preparing financial statements that do not necessarily
conform to U.S. generally accepted accounting principles. At the end of the most recent year (Year 2), those financial
statements show total assets of $900,00O, total liabilities of $100,000, net assets without donor restriction of $400,000,
and net assets with donor restrictions of $400,000. This last category is composed of $300,000 in net assets with
purpose restrictions and $100,000 in net assets that must be permanently held. At the end of Year 1, financial statements
show total assets of $700,000, total liabilities of $60,000, net assets without donor restriction of $340,000, and net assets
with donor restrictions of $300,000. This last category is composed of $220,000 in net assets with purpose restrictions
and $80,000 in net assets that must be permanently held. Total expenses for Year 2 were $500,000 and reported under
net assets without donor restrictions. Each part that follows should be viewed as an independent situation.
Assume that this entity charges its members $100,000 each year (Year 1 and Year 2). The members get nothing in return for their dues.
The entity has consistently recorded the cash collections as an increase in cash and an increase in exchange revenues under net
assets without donor restrictions. The board of trustees has had a policy for several years that 10 percent of the money collected be
set aside and invested with the money held for emergency purposes. Cash is decreased and "investments held for emergencies" are
increased with each purchase.
Required:
a. What was the appropriate amount of net assets without donor restrictions at the end of Year 1?
Net assets without donor restrictions at the end of Year 1
$
340,000
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