Chapter 19, Problem 19.6E

(a)

To determine

Introduction: Journal entries is a systematic method of recording transactions as and when they occur. It is a summary of transactions divided into the debit and credit items that are recorded chronologically. It is an act of keeping and recoding all the transactions occurring in the business.

The journal entries for the transactions in 20X2.

Answer to Problem 19.6E

Journal Entries

S.no	Date	Particulars	Debit (in $)	Credit (in$)
1		Pledges receivable	700,000
		Allowance for uncollectible pledges		56,000
		Unrestricted contributions		506,000
		Temporarily restricted contributions		138,000
2		Grants receivable	150,000
		Temporarily restricted contributions		150,000
3		Cash- unrestricted	520,000
		Pledges receivable		520,000
		Allowance for uncollectible pledges	44,000
		Pledges receivable		30,000
		Unrestricted contributions		14,000
4		Land, buildings and equipment	15,000
		Unrestricted cash		15,000
5		Mortgages payable	3,000
		Unrestricted cash		3,000
6		Cash- unrestricted	27,200
		Cash- temporarily restricted	5,400
		Investment income- unrestricted		27,200
		Investment income- temporarily restricted		5,400
		Cash- permanently restricted	6,000
		Endowment investments		5,000
		Gain on sale of investment- permanently restricted		1,000
7		Community service expense	12,000
		Public health education expenses	7,000
		Research expenses	10,000
		Fund raising expenses	15,000
		General and administrative expenses	9,000
		Accumulated depreciation		53,000
8		Community service expense	250,600
		Public health education expenses	100,000
		Research expenses	81,000
		Fund raising expenses	39,000
		General and administrative expenses	61,000
		Cash- unrestricted		531,600
9		Fund raising expense	2,400
		Donated services		2,400

Explanation of Solution

1. Recording the patients services provided
2. Recording operating expenses against credit for expenses
3. Recording contractual adjustments against revenues
4. Recording the transfer from specific purpose funds
5. Recording funds received from equipment acquisition
6. Recording receipt of unrestricted gifts
7. Recording collection from account receivables
8. Recording the increase in fair market value of securities.

(b)

To determine

Introduction: The statement of activities is the financial statement of a non- profit organization or otherwise. The statement of activities has multiple columns for reporting the amounts for the following net assets:

1. Without donor restriction funds
2. With donor restriction funds
3. The aggregate amount

The statement of activities for the financial year ended 20X2

Answer to Problem 19.6E

The net assets at the end of the year as per statement of activities is $846,400.

Explanation of Solution

Statement of activities for the year ended 31 December, 20X2

Particulars	Unrestricted	Temporarily restricted	Permanently restricted	Total
Revenues, gains and other supports:
Contributions, net of estimated uncollectible pledges	520,000	138,000		658,000
Grants		150,000		150,000
Investment income	27,200	5,400		32,600
Gain on investments			1,000	1.000
Donated services	2,400			2,400
Total gains, revenues and other support	549,600	293,400	1,000	844,000
Programs services and support:
Program services:
Community services	262,600			262,600
Public health education	107,000			107,000
Research	91,000			91,000
Total program services	460,600			460,600
Supporting services:
General and administrative	70,000			70,000
Fund raising	54,000			54,000
Total supporting services	124,000			124,000
Total expenses	584,600			584,600
Change in net assets	(35,000)	293,400	1,000	259,400
Net assets at the beginning of the year	281,000	87,000	219,000	587,000
Net assets at the end of the year	246,000	380,400	220,000	846,400