ACCT GOV.+NFP ENTITIES LOOSELEAF W/CONN.
ACCT GOV.+NFP ENTITIES LOOSELEAF W/CONN.
18th Edition
ISBN: 9781260949766
Author: RECK
Publisher: MCG
Question
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Chapter 14, Problem 22EP

a)

To determine

Prepare all necessary journal entries to record the given transactions.

a)

Expert Solution
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Explanation of Solution

Rules of Debit and Credit: Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

  • Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
  • Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

Prepare all necessary journal entries to record the given transactions:

DateAccounts title and ExplanationDebit ($)Credit ($)
1Rent expense$35,000 
     Contributions-without donor restrictions $35,000
 (To record the rent expenses paid for the net assets)  
    
2Cash$335,000 
 Contributions receivable$100,000 
     Contributions-without donor restrictions $185,000
     Contributions with donor restrictions — program     $250,000
 (To record the cash receipt and contribution receivables)  
    
3.Salaries & benefits expense$224,560 
     Cash $208,560
     Salaries & benefits payable 16,000
 (To record the salaries and benefits expenses)  
    
4Contributions receivable$100,000 
     Contributions with donor restrictions—time $94,260
     Discount on contributions receivable $5,740
 (To record the contribution receivable)  
    
5.Equipment & furniture$21,600 
     Cash $12,000
     Contributions without donor restrictions $9,600
 (To record the purchase of furniture and equipment)  
    
6Telephone expense$5,200 
 Printing & postage expense$12,000 
 Utilities expense$8,300 
 Supplies expense$4,300 
     Cash $26,200
     Accounts payable $3,600
 (To record the expenses partly paid and partly payable)  
    
7For this transaction no journal entry is required because no specialized skills required doing the jobs in the given transaction.
    
8Provision for uncollectible pledges$10,000 
     Allowance for uncollectible pledges -Unrestricted $10,000
 (To record the provision for uncollectible pledges)  
    
 Depreciation expense [($12,000/5Years)+($9,600/10years)]$3,360 
     Allowance for depreciation -  equipment & furniture $3,360
 (To record the depreciation expense)  
    
9Public health education program $105,952 
 Community service program$90,816 
 Management & general$60,544 
 Fund-raising$45,408 
     Salaries & benefits expense $224,560
     Rent expense $35,000
     Telephone expense $5,200
     Printing & postage expense $12,000
     Utilities $8,300
     Supplies expense $4,300
     Provision for uncollectible accounts $10,000
     Depreciation expense $3,360
 (To record the adjustment entries)  
    
10Net assets released satisfaction of purpose restriction - with donor  restrictions$105,952 
     Net assets released-satisfaction of purpose restriction-without donor  restrictions $105,952
 (To record the release of net assets)  
    
11Contributions—without donor restrictions (transactions 1, 2 and 5)$229,600 
 Net assets without donor restrictions$73,120 
     Public health education $105,952
     Community service $90,816
     Management & general $60,544
     Fund-raising $45,408
 (To record the closing entry for contributions- without donor restrictions)  
    
 Contributions-with donor restrictions- program$250,000 
 Contributions-with donor restrictions- time (transactions 2 &4)$94,260 
     Net assets with donor restrictions $344,260
 (To record the closing entry for the contributions – with donor restrictions  
    
 Net assets with donor restrictions$105,952 
     Net assets released—satisfaction of purpose restriction—with donor restrictions $105,952
 (To record the closing entry for the net assets with donor restrictions)  

Table (1)

Notes to the above table:

  • Compute the resource allocation based on the available information (transaction 9):

ACCT GOV.+NFP ENTITIES LOOSELEAF W/CONN., Chapter 14, Problem 22EP , additional homework tip  1

Table (2)

b.

To determine

Prepare the statement of activity for the year ended December 31, 2020.

b.

Expert Solution
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Explanation of Solution

Prepare the statement of activity for the year ended December 31, 2020:

        Entity I
Statement of activities
For the year ended December 31, 2020
ParticularsWithout donor   restrictionsWith donor restrictionstotal
Revenue and other Support:   
    Contributions-net assets released from restriction$ 229,600 $ 344,260 $ 573,860
    Satisfaction of purpose             $105,952 ($105,952)
Total revenue & other support (A)$335,552$238,308$573,860
    
Expenses:   
    Public health education$105,952 105,952
    Community services$90,816 90,816
    Management & general$60,544 60,544
    Fund-raising$45,40845,408
Total expenses (B)$302,720302,720
Increase in net assets (A) – (B)$32,832$238,308$271,140
Beginning net assets000
Ending net assets$ 32,832$ 238,308$ 271,140

Table (3)

Therefore, the total ending net assets are $271,140.

c)

To determine

Prepare a statement of financial position for the year ended December 31, 2020.

c)

Expert Solution
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Explanation of Solution

Statement of financial position: It is an itemized list of total assets and “liabilities and net assets.” The assets are classified into current and noncurrent assets. The liabilities are also classified into current and noncurrent liabilities. The assets should be equal to the liabilities and net assets.

Prepare a statement of financial position for the year ended December 31, 2020:

Entity I
Statement of Financial Positions
For the year ended December 31, 2020
AssetsAmount ($)
Cash$88,240
 Contributions receivable (less allowance for uncollectible accounts of $10,000 and discount on contributions receivable of $5,740)$184,260
Equipment and furniture (less allowance for accumulated depreciation of $3,360)

$18,240

Total Assets$290,740
  
Liabilities: 
Accounts payable$3,600
Salaries & benefits payable$16,000
Total liabilities$19,600
  
Net Assets: 
Without donor restrictions$32,832
With donor restrictions$238,308
Total net assets$271,140
Total liabilities and net assets$290,740

Table (4)

d)

To determine

Prepare a statement of cash flow for the year ended December 31, 2020.

d)

Expert Solution
Check Mark

Explanation of Solution

Prepare a statement of cash flow for the year ended December 31, 2020:

ACCT GOV.+NFP ENTITIES LOOSELEAF W/CONN., Chapter 14, Problem 22EP , additional homework tip  2

Table (5)

e)

To determine

Prepare the schedule of expenses by nature and function for the year ended December 31, 2020.

e)

Expert Solution
Check Mark

Explanation of Solution

Prepare the schedule of expenses by nature and function for the year ended December 31, 2020:

ACCT GOV.+NFP ENTITIES LOOSELEAF W/CONN., Chapter 14, Problem 22EP , additional homework tip  3

Table (6)

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