Chapter 15 – Accounting for Colleges and Universities
15-32
Ch. 15, Solutions, Exercise 15-20 (Cont’d)
5. INFRASTRUCTURE 1,980,000
6. RESEARCH EXPENSE 25,000
CASH 25,000
(Note that public colleges and universities often use the same NACUBO
7. PROVISION FOR BAD DEBTS 1,670
ALLOWANCE FOR DOUBTFUL ACCOUNTS 1,670
(Note that private colleges and universities directly adjust the revenue
15-33
Copyright ©2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written
consent of McGraw-Hill Education.
Ch. 15, Solutions (Cont’d)
15-21. a. ALLEN UNIVERSITY
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2020
Without Donor
Restrictions
With Donor
Restrictions
Total
Revenues and gains:
Student tuition and fees
(net)*
$ 963,750
$ 963,750
Contributions
310,200
$327,000
637,200
Grants and contracts
324,000
324,000
Investment income
50,500
29,500
80,000
Auxiliary Enterprises
153,560
153,560
Gain on sale of investments
70,000
70,000
Unrealized gain on
investments
125,440
53,760
179,200
Other revenue
13,250
13,250
Net assets released from
restrictions
426,850
(426,850)
0
Total revenues and gains
2,113,550
307,410
2,420,960
Expenses and losses:
Educational and general
expenses:
Instruction
1,044,630
1,044,630
Research
571,800
571,800
Academic support
240,560
240,560
Student services
193,000
193,000
Institutional support
203,360
203,360
Total educational and
general expense
2,253,350
2,253,350
Auxiliary enterprises
158,700
158,700
Total expenses and losses
2,412,050
2,412,050
Total change in net assets
(298,500)
307,410
8,910
Net assets, beginning of the
year
3,353,110
1,320,600
4,673,710
Net assets, end of the year
$3,054,610
$1,628,010
$4,682,620
Chapter 15 – Accounting for Colleges and Universities
Ch. 15, Solutions, Exercise 15-21 (Cont’d)
b.
ALLEN UNIVERSITY
STATEMENT OF FINANCIAL POSITION
Chapter 15 – Accounting for Colleges and Universities
15-35
Ch. 15, Solutions, Exercise 15-21 (Cont’d)
c.
ALLEN UNIVERSITY
STATEMENT OF CASH FLOWS
Depreciation 30,070
Gain on sale of investments (70,000)
Unrealized gain on investments (179,200)
Net cash used by operating activities (215,940)
Cash Flows from Investing Activities:
General Problem Information: Private university trial balance to FS
Learning Objective: 15-4
Topic: Reporting and Accounting Issues
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge Application, AICPA: FN: Reporting
15-36
Copyright ©2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written
consent of McGraw-Hill Education.
Ch. 15, Solutions (Cont’d)
15-22. a.
The CFI score is comprised of four ratios as described in Illustration 15–7. Illustration 15-8 and 15-9
provide a template for how to calculate the CFI.
Revenues
10%
Return on Net
Viability
3.71
.417
8.90
35%
3.12
Total CFI
5.95
Ratio Name
Ratio Calculation for Allen University
Primary Reserve
((4,682,620 − 1,000,000 − 1,537,440+792,000) /
2,412,050) = 1.22
Net Operating Revenues
−298,500 / 2,113,550 = −14.12%
Return on Net Assets
8,910 / 4,673,710 = 0.19%
Viability
((4,682,620 – 1,000,000 − 1,537,440 + 792,000) /
792,000) = 3.71
Chapter 15 – Accounting for Colleges and Universities
15-37
Ch. 15, Solutions, Exercise 15-22 (Cont’d)
c. Financial health is only once aspect of performance. To truly gauge how well a college or
university is performing, nonfinancial performance measures must also be considered.
For example, are students graduating in a timely fashion? Does the university offer
reasonable value when comparing the cost to attend with salaries post-graduation?
15-38
Copyright ©2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written
consent of McGraw-Hill Education.
Ch. 15, Solutions (Cont’d)
15-23. a. WILSON STATE COLLEGE
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
FOR THE YEAR ENDED JUNE 30, 2020
(AMOUNTS IN THOUSANDS)
Revenues:
Operating revenues:
Student tuition and fees (net of discount & allowances)
$ 22,530
Grants and contracts
18,196
Auxiliary enterprises
14,595
Total operating revenue
55,321
Expenses:
Operating expenses:
Academic support
58,940
Institutional support
26,268
Scholarships and fellowships expenses
7,664
Depreciation expense
5,580
Auxiliary enterprises
12,197
Total operating expenses
110,649
Operating loss
(55,328)
Nonoperating revenues (expenses):
State appropriation
44,894
Investment income
1,745
Interest expense
(378)
Net nonoperating revenues
46,261
Income before other revenues, expenses, gains or losses
(9,067)
Capital appropriations
12,785
Increase in net position
3,718
Net position, beginning of the year
285,662
Net position, end of the year
$289,380
Chapter 15 – Accounting for Colleges and Universities
Ch. 15, Solutions, Exercise 15-23 (Cont’d)
Chapter 15 – Accounting for Colleges and Universities
Ch. 15, Solutions, Exercise 15-23 (Cont’d)
c. WILSON STATE COLLEGE
STATEMENT OF CASH FLOWS
Chapter 15 – Accounting for Colleges and Universities
15-41
Ch. 15, Solutions, Exercise 15-23 (Cont’d)