Chapter 15, Problem 18EP

a.

To determine

Prepare journal entries to record the transactions for the year ended June 30, 2017.

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, 2017:

Date	Particulars	Post ref.	Debit	Credit
1	Tuition receivable		$5,254,000
	Tuition and fees discount and allowances		$69,600
	Instruction expense		$276,400
	Tuition and fees – unrestricted			$5,600,000
	( To record the tuition revenue)
2	Tuition and fees – unrestricted		$101,670
	Tuition receivable			$101,670
	( To record the refund of tuition fees)
3	Cash		$2,466,200
	Investments		$1,000,000
	Contributions - unrestricted			$1,891,000
	Contributions  - temporarily restricted			$575,200
	Contributions  - permanently restricted			$1,000,000
	( To record the receipt of contributions)
4	Pledges receivable		$1,090,000
	Contributions  - temporarily restricted			$790,000
	Contributions  - permanently restricted			$300,000
	(To record the pledge receivable)
5	Cash		$94,370
	Auxiliary enterprises - unrestricted			$94,370
	(To record the receipt from goods and services)
6	Cash		$5,080,000
	Tuition receivable			$5,080,000
	(To record the collections from tuition receivable)
7	Investments		$1,000,000
	Cash			$1,000,000
	(To record the investment of unrestricted cash)
8	Equipment		$10,580
	Cash			$10,580
	(To record the purchase of computer equipment)
9	Instruction Expense		$3,566,040
	Academic Support Expense		$1,987,000
	Student services expense		$87,980
	Institutional support expense		$501,130
	Auxiliary enterprises expense		$92,410
	Cash			$6,234,560
	(To record the cash payment made for expenses)
10	Instruction Expense		$450,000
	Cash			$450,000
	(To record the cash payment made for instruction expense)
	Net Assets Released From Restrictions – Temporarily restricted		$450,000
	Net Assets Released From Restrictions – Unrestricted			$450,000
	(To record the release of temporarily restricted net assets)
11	Tuition and fees – unrestricted		$7,200
	Allowance for doubtful accounts			$7,200
	(To record the allowance for doubtful debts for the year)
	Investments		$11,540
	Unrealized gain on Investments - Unrestricted			$8,500
	Unrealized gain on Investments -  Permanently restricted			$3,040
	(To record the fair value of investments)
	Instruction expense		$34,750
	Auxiliary enterprises expense		$41,000
	Academic Support Expense		$12,450
	Accumulated Depreciation			$88,200
	( To record the expenses for the year)
12	Tuition And Fees—Unrestricted		$5,491,130
	Contributions—Unrestricted		$1,891,000
	Auxiliary enterprises - Unrestricted		$94,370
	Unrealized Gain On Investments - Unrestricted		$8,500
	Tuition and fees discount and allowances			$69,600
	Instruction Expense			$4,327,190
	Academic Support Expense			$1,999,450
	Student Services Expense			$87,980
	Institutional Support Expense			$501,130
	Auxiliary enterprises expense			$133,410
	Net assets - unrestricted			$366,240
	(To record the closing of nominal accounts)
	Contributions – Temporarily restricted		$1,365,200
	Net assets – Temporarily restricted			$1,365,200
	(To close nominal accounts )
	Contributions – Permanently restricted		$1,300,000
	Unrealized Gain On Investments - Permanently restricted		$3,040
	Net Assets - Permanently restricted			$1,303,040
	(To close nominal accounts )
	Net assets - Temporarily restricted		$450,000
	Net Assets Released From Restrictions - Unrestricted		$450,000
	Net Assets - unrestricted			$450,000
	Net assets released from Restrictions – Temporarily restricted			$450,000
	(To reclassify the net assets)

Table (1)

b.

To determine

Prepare a statement of activities for the year ended June 30, 2017.

Explanation of Solution

Prepare a statement of activities for the year ended June 30, 2017:

College E
Statement of activities
For the year ended June 30, 2017
Particulars	Unrestricted	Temporarily restricted	Permanently restricted	Total
Revenues and gains:
Student tuition and fees (net)	$5,421,530			$5,421,530
Contributions	$1,891,000	$1,365,200	$1,300,000	$4,556,200
Auxiliary Enterprises	$94,370			$94,370
Unrealized gain on investments	$8,500		$3,040	$11,540
Net assets released from restrictions	$450,000	($450,000)		$0
Total revenues and gains (A)	$7,865,400	$915,200	$1,303,040	$10,083,640
Expenses and losses:
Educational and general expenses:
Instruction expense	$4,327,190			$4,327,190
Academic support expense	$1,999,450			$1,999,450
Student services	$87,980			$87,890
Institutional support expense	$501,130			$501,130
Total educational and general expense	$6,915,750			$6,915,750
Auxiliary enterprises	$133,410			$133,410
Total expenses and losses (B)	$7,049,160			$7,049,160
Total change in net assets $\left(\text{C}\right)=\left(\text{A}\right)-\left(\text{B}\right)$	$816,240	$915,200	$1,303,040	$3,034,480
Add: Net assets, beginning of the year	$7,518,000	$200,000	$5,000,000	$12,718,000
Net assets, end of the year	$8,334,240	$7,418,240	$7,418,240	$15,752,480

Table (2)