Required Prepare a statement of financial position as of June 30, 2020. KARE COUNSELING CENTER Statement of Financial Position June 30, 2020 Assets ←
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
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The Kare Counseling Center was incorporated as a not-for-profit voluntary health and welfare organization 10 years ago.
Its adjusted trial balance as of June 30, 2020, follows.
Cash
Pledges Receivable-Without Donor Restrictions
Estimated Uncollectible Pledges
Inventory
Investments
Furniture and Equipment
Accumulated Depreciation-Furniture and Equipment
Accounts Payable
Net Assets Without Donor Restrictions
Net Assets With Donor Restrictions-Programs
Net Assets With Donor Restrictions-Permanent Endowment
Contributions-Without Donor Restrictions
Contributions-With Donor Restrictions-Programs
Investment Income-Without Donor Restrictions
Net Assets Released from Restrictions-With Donor Restrictions
Net Assets Released from Restrictions-Without Donor Restrictions
Salaries and Fringe Benefit Expense
Occupancy and Utility Expense
Supplies Expense
Printing and Publishing Expense
Telephone and Postage Expense
Unrealized Gain on Investments
Depreciation Expense
Totals
Debits
$ 126,500
41,000
Required
a. Prepare a statement of financial position as of June 30, 2020.
2,800
178,000
210,000
22,000
288,410
38,400
6,940
4,190
3,500
Credits
$ 4,100
120,000
20,520
196,500
50,500
140,000
348,820
38,100
9,200
22,000
2,000
30,000
$ 951,740 $ 951,740
1. Salaries and fringe benefits were allocated to program services and supporting services in the following percentages:
counseling services, 40 percent; professional training, 20 percent; community service, 10 percent; management and
general, 20 percent; and fund-raising, 10 percent. Occupancy and utility, supplies, printing and publishing, and
telephone and postage expenses were allocated to the programs in the same manner as salaries and fringe benefits.
Depreciation expense was divided equally among all five functional expense categories.
2. The organization had $165,314 of cash on hand at the beginning of the year. During the year, the center received cash
from contributors: $310,800 that was unrestricted and $38,100 that was restricted for the purchase of equipment for
the center. It had $9,200 of income earned and received on long-term investments. The center spent cash of $288,410
on salaries and fringe benefits, $22,000 on the purchase of equipment for the center, and $86,504 for operating
expenses. Other pertinent information follows: net pledges receivable increased $6,000, inventory increased $1,000,
accounts payable decreased $102,594, and there were no salaries payable at the beginning of the year.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F99a0c143-9260-4acb-a154-00535acc3828%2Ffd079b47-6256-4080-b6ce-c10b74bf46e2%2Fy08bqen_processed.png&w=3840&q=75)
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