Chapter 13 – Accounting for Not-for-Profit Organizations
13–28
Ch. 13, Solutions, 13–22 (Cont’d)
ART LEAGUE
GENERAL JOURNAL
Debits Credits
4. RENT EXPENSE 18,000
CONTRIBUTIONS—UNRESTRICTED 18,000
5. SALARY EXPENSE 46,900
(Prepaid Expenses; $1,060-$840=$220 decrease: Accounts
Payable and Accrued Expenses; $2,746-$2,649=$97 increase)
6. CASH 2,900
7. COMMUNITY ART EDUCATION 825
CASH 825
Chapter 13 – Accounting for Not-for-Profit Organizations
13–29
Ch. 13, Solutions, 13–22 (Cont’d)
ART LEAGUE
GENERAL JOURNAL
Debits Credits
8. DEPRECIATION EXPENSE 1,642
ALLOWANCE FOR DEPRECIATION—EQUIPMENT 1,642
9. EXHIBITION PROGRAM 21,472
COMMUNITY ART EDUCATION PROGRAM 21,472
MANAGEMENT & GENERAL 17,893
Chapter 13 – Accounting for Not-for-Profit Organizations
13–30
Ch. 13, Solutions, 13–22 (Cont’d)
ART LEAGUE
GENERAL JOURNAL
Debits Credits
11. CONTRIBUTIONS—UNRESTRICTED 41,981
(trans. 1, 3 and 4)
MEMBERSHIP DUES 16,285
TUITION & FEES 6,974
Chapter 13 – Accounting for Not-for-Profit Organizations
13–31
Ch. 13, Solutions, 13–22(Cont’d)
c. ART LEAGUE
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2017
Temporarily Permanently
Unrestricted Restricted Restricted Total
REVENUE & OTHER
SUPPORT:
CONTRIBUTIONS $ 41,981 $ 41,981
MEMBERSHIP DUES 16,285 16,285
NET ASSETS RELEASED
FROM RESTRICTION
SATISFACTION OF PURPOSE 2,467 (2,467) _______
TOTAL REVENUE & OTHER
SUPPORT 70,795 (1,198) _______ 69,597
EXPENSES:
Chapter 13 – Accounting for Not-for-Profit Organizations
13–32
Ch. 13, Solutions, 13–22 (Cont’d)
d. ART LEAGUE
STATEMENT OF FINANCIAL POSITION
JUNE 30, 2017
ASSETS:
CASH (beginning balance, trans. 1, 2, 5, 6, 7, and 10) $ 3,719
SHORT-TERM INVESTEMENTS (beginning balance and trans. 6) 9,211
GRANTS RECEIVABLE (beginning balance, trans. 1 and 3) 5,020
PREPAID EXPENSE (trans. 5) 840
ASSETS RESTRICTED:
LIABILITIES:
General Problem Information: Recording and reporting transactions
Learning Objective: 13-3
Learning Objective: 13-4
Topic: Financial Reporting
Bloom’s Taxonomy: Apply
Chapter 13 – Accounting for Not-for-Profit Organizations
13–33
Ch. 13, Solutions, 22 (Cont’d)
Accreditation Skills tag: AACSB: Knowledge Application, AICPA: FN: Reporting
Level of Difficulty: Hard
13–23. Some of the corrections or modifications that should be made to the
Center to Advance Student Learning’s statement of financial position
include:
• Short and long-term investments should be separated since the
noncurrent.
• Based on the reporting of the net assets it appears that there is a
missing classification in the assets section. There is at least
$1,225,000 in permanently restricted net assets that should be
Chapter 13 – Accounting for Not-for-Profit Organizations
13–34
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Ch. 13, Solutions, 13–23 (Cont’d)
• The net assets classified as temporarily restricted due to a debt-
covenant should be classified as unrestricted. Under FASB
standards only those assets with donor imposed restrictions can be
classified as temporarily restricted.
• The net assets classified as permanently restricted due to board
designation should be classified as unrestricted. A board
designation such as this is considered a quasi-endowment. Because
the board has the ability to reverse any action in takes, the amount
designated is not considered to be permanently restricted.
General Problem Information: Identify departures from GAAP
Learning Objective: 13-4
Topic: Financial Reporting
Bloom’s Taxonomy: Evaluate
Accreditation Skills tag: AACSB: Analytical Thinking, AICPA: FN: Reporting
Level of Difficulty: Hard
Chapter 13 – Accounting for Not-for-Profit Organizations
13–35
Ch. 13, Solutions (Cont’d)
13-24.
a. KARE COUNSELING CENTER
STATEMENT OF FINANCIAL POSITION
JUNE 30, 2017
ASSETS LIABILITIES AND NET ASSETS
CASH $ 126,500 ACCOUNTS PAYABLE $ 20,520
PLEDGES RECEIVABLE
($41,000 less uncollectible
pledges of $4,100) 36,900
INVENTORY 2,800
INVESTMENTS (at fair value) 178,000
Chapter 13 – Accounting for Not-for-Profit Organizations
13–36
Ch. 13, Solutions, 13-24 (Cont’d)
KARE COUNSELING CENTER
STATEMENT OF FUNCTIONAL EXPENSES
YEAR ENDED JUNE 30, 2017
b.
PROGRAM SERVICES
SUPPORTING SERVICES
ALL
SERVICES
Counsel-
ing
Services
Profes-
sional
Training
Community
Services
TOTAL
Mgmt &
General
Fund–
Raising
TOTAL
TOTAL
Salaries and Fringe
$115,364
$57,682
$28,841
$201,887
$57,682
$28,841
$86,523
$288,410
Occupancy and Utility
15,360
7,680
3,840
26,880
7,680
3,840
11,520
38,400
Supplies
2,776
1,388
694
4,858
1,388
694
2,082
6,940
Printing and Publishing
1,676
838
419
2,933
838
419
1,257
4,190
Telephone and Postage
1,400
700
350
2,450
700
350
1,050
3,500
Depreciation
6,000
6,000
6,000
18,000
6,000
6,000
12,000
30,000
TOTAL EXPENSES
$142,576
$74,288
$40,144
$257,008
$74,288
$40,144
$114,432
$371,440
Chapter 13 – Accounting for Not-for-Profit Organizations
13–37
Ch. 13, Solutions 13-24, (Cont’d)
c.
KARE COUNSELING CENTER
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2017
Unrestricted
Temporarily
Restricted
Permanently
Restricted
Total
REVENUES, GAINS, &
OTHER SUPPORT:
CONTRIBUTIONS
$348,820
$38,100
$386,920
INVESTMENT INCOME
9,200
9,200
UNREALIZED GAIN ON
INVESTMENTS
2,000
2,000
TEMPORARILY
RESTRICTED NET
ASSETS RELEASED
FROM RESTRICTIONS
22,000
(22,000)
0
TOTAL REVENUES, GAINS &
OTHER SUPPORT
382,020
16,100
398,120
EXPENSES AND LOSSES:
PROGRAM SERVICES:
COUNSELING SERVICES
142,576
142,576
PROFESSIONAL TRAINING
74,288
74,288
COMMUNITY SERVICE
40,144
_ _____
_______
40,144
TOTAL PROGRAM
EXPENSES
257,008
257,008
SUPPORT EXPENSES:
MGMT & GENERAL
74,288
74,288
FUND-RAISING
40,144
40,144
TOTAL SUPPORT
EXPENSES
114,432
______
__ ____
114,432
TOTAL EXPENSES & LOSSES
371,440
0
0
371,440
CHANGE IN NET ASSETS
10,580
16,100
0
26,680
NET ASSETS, JULY 1, 2016
196,500
50,500
140,000
387,000
NET ASSETS, JUNE 30, 2017
$207,080
$66,600
$140,000
$413,680
Chapter 13 – Accounting for Not-for-Profit Organizations
13–38
Ch. 13, Solutions 13-24 (Cont’d)
d.
KARE COUNSELING CENTER
STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
CASH RECEIVED FROM CONTRIBUTORS $ 310,800
CASH RECEIVED AS INVESTMENT INCOME 9,200
CASH PAID TO EMPLOYEES (288,410)
CASH PAID FOR OPERATING EXPENSES (86,504)
NET CASH PROVIDED BY OPERATING ACTIVITIES (54,914)
CASH FLOWS FROM INVESTING ACTIVITIES:
RECONCILIATION OF CHANGES IN NET ASSETS TO NET CASH
USED FOR OPERATING ACTIVITIES:
CHANGE IN NET ASSETS $ 26,680
ADJUSTMENTS TO RECONCILE CHANGE IN NET ASSETS
Chapter 13 – Accounting for Not-for-Profit Organizations
13–39
Ch. 13, Solutions 13-24 (Cont’d)
General Problem Information: Prepare financial statements
Learning Objective: 13-4
Topic: Financial Reporting
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge Application, AICPA: FN: Reporting
Level of Difficulty: Hard