Chapter 15, Problem 17EP

a.

To determine

Prepare journal entries to record the transactions for the year ended June 30, 2020.

Explanation of Solution

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Prepare journal entries to record the transactions for the year ended June 30, 2020:

Date	Particulars	Post. Ref.	Debits	Credits
1	Tuition and fees receivable		$223,100
	Tuition & fees discount and allowances		$21,400
	Tuition & fees - without donor restrictions			$244,500
	( To record the receipt of tuition fees )
	Tuition & fees -without donor restrictions		$11,200
	Cash			$11,200
	( To record the refund of tuition fees )
	Instruction expense		$17,300
	Accounts payable and accrued liabilities			$17,300
	( To record the waiver of tuition fees )
2	Cash		$3,235
	Pledges receivable		$550
	Contributions without donor restrictions			$2,080
	Contributions-without donor restrictions – time			$550
	Contributions-with donor restrictions - endowment			$335
	Pledges receivable			$820
	( To record the receipt of contributions)
3	Cash		$222,600
	Tuition and fees receivable			$222,600
	(To record the receipt of tuition fees)
4	Deposits held in custody for others		$10
	Cash			$10
	(To record the return of net deposits)
5	Instruction  expense		$86,100
	Academic support expense		$23,300
	Student service expense		$37,700
	Institutional support expense		$28,500
	Cash			$170,290
	Prepaid assets			$534
	Accounts payable and liabilities			$4,776
	( To record the expenses incurred)
	Net assets released from restrictions - with donor restrictions		$7,320
	Net assets released from restrictions – without donor restrictions			$7,320
	(To record the release of net assets with donor restrictions)
6	Accounts payable and accrued liabilities (1)		$41,271
	Cash			$41,271
	( To record the payment made to accounts payable)
7	Cash		$3,960
	Investment income - without donor restrictions			$1,890
	Investment income - with donor  restrictions - scholarships			$2,070
	(To record the receipt of investment earnings)
8	Tuition and fees - without donor restrictions		$20
	Allowance for doubtful accounts			$20
	(To record the allowance for doubtful debts)
	Instruction expense		$18,480
	Academic support expense		$7,920
	Accumulated depreciation			$26,400
	(To record the depreciation expense)
	Tuition and fees - without donor restrictions		$10
	Unearned revenue			$10
	(To record the unearned tuition revenue)
	Investments		$4,700
	Unrealized gain on investments – without donor restrictions			$2,300
	Unrealized gain on investments – with donor  restrictions- scholarships			$790
	Unrealized gain on investments - with donor restrictions - endowment			$1,610
	(To record the increase in fair value of investments)
9	Tuition and fees without donor restrictions		$233,270
	Contributions - without donor restrictions		$2,080
	Investment income - without donor restrictions		$1,890
	Unrealized gain on investments - without donor restrictions		$2,300
	Net assets - without donor restrictions		$1,160
	Tuition & fees discount and allowances			$21,400
	Instruction expense			$121,880
	Academic support expense			$31,220
	Student services expense			$37,700
	Institutional support expense			$28,500
	(To record the closing of nominal accounts)
	Contributions - with donor restrictions - time		$550
	Investment income - with donor restrictions  scholarships		$2,070
	Donor restrictions-scholarships		$790
	Net assets-with donor restrictions			$3,410
	(To record the closing of net assets with donor restrictions)
	Contributions - with donor restrictions- endowment		$335
	Unrealized gain on investments- with donor restrictions - endowment		$1,610
	Net assets - with donor restrictions			$1,945
	(To record the closing of net assets with donor restrictions)
	Net assets - with donor restrictions		$7,320
	Net assets released from restrictions-without donor restrictions		$7,320
	Net assets - without donor restrictions			$7,320
	Net assets released from restrictions – with donor restrictions			$7,320
	(To record the classification of net assets)

Table (1)

Working note 1: Calculate total accounts payable settled during the year:

It is given that opening balance is $21,130, increase during the year $17,300 (for instruction expense) and $4776 (for academic expenses). Closing balance is $1,935

Accounts payable is opening balance plus increase during the year minus closing balance.

$\begin{array}{c}\text{Accounts payable}=\text{Opening balance}+\text{Increase during the year}-\text{Closing balance}\\ =\$21,130+\$17,300+\$4,776-\$1,935\\ =\$41,271\end{array}$

b.

To determine

Prepare a statement of activities of College S for the year ended June 30, 2020.

Explanation of Solution

Statement of activities: Statement of activities is the operating statement that reports revenues, expenses, and other financing sources.

Prepare a statement of activities for the year ended June 30, 2020:

College S
Statement of Activities
For the year ended June 30, 2020
Particulars	Without Donor Restrictions	With Donor Restrictions	Total
Revenues and gains:
Student tuition and fees (net)	$211,870		$211,870
Contributions	$2,080	$885	$2,965
Investment income	$1,890	$2,070	$3,960
Unrealized gain on investments	$2,300	$2,400	$4,700
Net assets released from restrictions	$7,320	($7,320)	$0
Total revenues and gains	$225,460	($1,965)	$223,495
Expenses and losses:
Educational and general expenses:
Instruction	$121,880		$121,880
Academic support	$31,220		$31,220
Student services	$37,700		$37,700
Institutional support	$28,500		$28,500
Total expenses and losses	$219,300		$219,300
Total change in net assets	$6,160	($1,965)	$4,195
Net assets, beginning of the year	$104,000	$229,940	$333,940
Net assets, end of the year	$110,160	$227,975	$338,135

Table (2)

c.

To determine

Prepare statement of financial position of College S for the year ended June 30, 2020.

Explanation of Solution

Statement of financial position: Statement of financial position is a balance sheet that reports the assets, deferred outflow of resources, liabilities, deferred inflow of resources and the residual amount or net position of the government at the end of the fiscal year.

Prepare statement of financial position of College S for the year ended June 30, 2020:

College S
Statement of Financial position
For the year ended June 30, 2020
Particulars	Amount
Assets
Cash and cash equivalents	$7,758
Short-term investments	$7,666
Tuition and fees receivable (net of doubtful accounts of $32)	$710
Pledges receivable (net of doubtful pledges of $280)	$5,602
Prepaid assets	$830
Property, plant and equipment (net of accumulated depreciation of $130,640)	$255,004
Investments (at fair value, cost of $162,000)	$163,100
Total assets	$440,670
Liabilities and Net Assets
Liabilities:
Accounts payable and accrued liabilities	$1,935
Deposits held in custody for others	$690
Unearned revenue	$910
Bonds payable	$99,000
Total liabilities	$102,535
Net Assets:
Without donor restrictions	$110,160
With donor restrictions	$227,975
Total net assets	$338,135
Total liabilities and net assets	$440,670

Table (3)