Chapter 14 – Accounting for Not-for-Profit Organizations
14-21
Ch. 14, Solutions, Exercise 14-24, a. (Cont’d)
INVOLVE
GENERAL JOURNAL
Debits Credits
2. CASH 335,000
CONTRIBUTIONS RECEIVABLE 100,000
CONTRIBUTIONS—WITHOUT DONOR
RESTRICTIONS 185,000
3. SALARIES & BENEFITS EXPENSE 224,560
CASH 208,560
SALARIES & BENEFITS PAYABLE 16,000
4. CONTRIBUTIONS RECEIVABLE 100,000
5. EQUIPMENT & FURNITURE 21,600
CASH 12,000
CONTRIBUTIONS—WITHOUT DONOR
RESTRICTIONS 9,600
Chapter 14 – Accounting for Not-for-Profit Organizations
14-22
Ch. 14, Solutions, Exercise 14-24, a. (Cont’d)
INVOLVE
GENERAL JOURNAL
Debits Credits
6. TELEPHONE EXPENSE 5,200
PRINTING & POSTAGE EXPENSE 12,000
ACCOUNTS PAYABLE 3,600
7. NO TRANSACTION IS RECORDED – NO SPECIALIZED SKILL IS REQUIRED.
8. PROVISION FOR UNCOLLECTIBLE PLEDGES 10,000
ALLOWANCE FOR UNCOLLECTIBLE PLEDGES
Chapter 14 – Accounting for Not-for-Profit Organizations
14-23
Ch. 14, Solutions, Exercise 14-24, a. (Cont’d)
INVOLVE
GENERAL JOURNAL
Debits Credits
9. PUBLIC HEALTH EDUCATION PROGRAM 105,952
COMMUNITY SERVICE PROGRAM 90,816
MANAGEMENT & GENERAL 60,544
FUND-RAISING 45,408
SALARIES & BENEFITS EXPENSE 224,560
RENT EXPENSE 35,000
ALLOCATION OF NATURAL EXPENSES TO FUNCTIONS
Public Health
Education
Community
Service
Management &
General
Fund-raising
Total
Salary & Benefits Expense
$78,596
$67,368
$44,912
$33,684
$224,560
Rent Expense
12,250
10,500
7,000
5,250
35,000
Telephone Expense
1,820
1,560
1,040
780
5,200
Printing & Postage Expense
4,200
12,000
Utilities
2,905
2,490
1,660
1,245
8,300
Supplies Expense
1,505
1,290
860
645
4,300
Pledges
3,500
3,000
2,000
10,000
Depreciation Expense
1,176
1,008
672
504
3,360
Total
$105,952
$90,816
$60,544
$45,408
$302,720
Chapter 14 – Accounting for Not-for-Profit Organizations
14-24
Ch. 14, Solutions, Exercise 14-24, a. (Cont’d)
INVOLVE
GENERAL JOURNAL
Debits Credits
10. NET ASSETS RELEASED—SATISFACTION OF
PURPOSE RESTRICTION—WITH DONOR
RESTRICTIONS 105,952
11. CONTRIBUTIONS—WITHOUT DONOR RESTRICTIONS 229,600
(trans. 1, 2 and 5)
NET ASSETS WITHOUT DONOR RESTRICTIONS 73,120
PUBLIC HEALTH EDUCATION 105,952
COMMUNITY SERVICE 90,816
MANAGEMENT & GENERAL 60,544
FUND-RAISING 45,408
NET ASSETS WITH DONOR RESTRICTIONS 105,952
NET ASSETS RELEASED—SATISFACTION OF
PURPOSE RESTRICTION—WITH DONOR
RESTRICTIONS 105,952
Chapter 14 – Accounting for Not-for-Profit Organizations
14-25
Ch. 14, Solutions, Exercise 14-24, a. (Cont’d)
INVOLVE
GENERAL JOURNAL
Debits Credits
NET ASSETS RELEASED—SATISFACTION OF
RESTRICTIONS 105,952
NET ASSETS WITHOUT DONOR RESTRICTIONS 105,952
b. INVOLVE
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED DECEMBER 31, 2023
WITHOUT DONOR WITH DONOR
RESTRICTIONS RESTRICTIONS TOTAL
REVENUE & OTHER
SUPPORT:
CONTRIBUTIONS $229,600 $344,260 $573,860
NET ASSETS RELEASED
FROM RESTRICTION
EXPENSES:
PUBLIC HEALTH EDUCATION 105,952 105,952
COMMUNITY SERVICES 90,816 90,816
MANAGEMENT & GENERAL 60,544 60,544
FUND-RAISING 45,408 _______ 45,408
TOTAL EXPENSES 302,720 _______ 302,720
Chapter 14 – Accounting for Not-for-Profit Organizations
14-26
Ch. 14, Solutions, Exercise 14-24 (Cont’d)
c. INVOLVE
STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 2023
ASSETS:
CASH $ 88,240
CONTRIBUTIONS RECEIVABLE (less allowance for
Uncollectible accounts of $10,000 and discount on
contributions receivable of $5,740) 184,260
LIABILITIES:
ACCOUNTS PAYABLE $ 3,600
SALARIES & BENEFITS PAYABLE 16,000
TOTAL LIABILITIES 19,600
NET ASSETS:
WITHOUT DONOR RESTRICTIONS 32,832
Chapter 14 – Accounting for Not-for-Profit Organizations
14-27
Ch. 14, Solutions, Exercise 14-24 (Cont’d)
d. INVOLVE
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
CASH RECEIVED FROM CONTRIBUTIONS $335,000
CASH FLOWS FROM INVESTING ACTIVITIES:
PURCHASE OF EQUIPMENT (12,000)
NET INCREASE IN CASH 88,240
BEGINNING CASH 0
ENDING CASH $ 88,240
ADJUSTMENTS TO RECONCILE CHANGES IN NET ASSETS
TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION 3,360
INCREASE IN NET CONTRIBUTIONS RECEIVABLE (184,260)
INCREASE IN ACCOUNTS PAYABLE 3,600
NOTE: INVOLVE has elected to prepare the cash flow statement using the direct method and
provide an optional reconciliation of changes in net assets to net cash provided by operating
activities.
Chapter 14 – Accounting for Not-for-Profit Organizations
14-28
Ch. 14, Solutions, Exercise 14-24 (Cont’d)
e. INVOLVE
REPORTING OF EXPENSES BY NATURE AND FUNCTION
FOR THE YEAR ENDED DECEMBER 31, 2023
PROGRAM SERVICES
SUPPORT SERVICES
Public Health
Education
Community
Service
Management
& General
Fund-raising
TOTAL
Salary & Benefit
Expense
$ 78,596
$ 67,368
$ 44,912
$ 33,684
$224,560
Rent Expense
1,820
1,040
780
5,200
Printing & Postage
4,200
3,600
2,400
1,800
12,000
Utilities
2,905
2,490
1,660
1,245
8,300
Supplies Expense
1,505
1,290
860
645
4,300
Provision for Uncollectible
Accounts
3,500
3,000
1,176
1,008
504
3,360
TOTAL
General Problem Information: Recording and reporting transactions
Learning Objective: 14-3
Learning Objective: 14-5
Topic: Accounting for NFP Organizations; Preparing Journal Entries and Financial
Statements
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge Application, AICPA: FN: Reporting
Level of Difficulty: Hard
Chapter 14 – Accounting for Not-for-Profit Organizations
14-29
14-25.
a. For the volunteers’ time to be recorded as a contribution and related expense, the activities
performed by the volunteers would (1) require specialized skill, (2) be provided by someone
b. ART LEAGUE
GENERAL JOURNAL
Debits Credits
1. CASH 60,730
CONTRIBUTIONS—WITHOUT DONOR
RESTRICTIONS 20,861
GRANTS RECEIVABLE 4,600
2. CASH 1,955
INVESTMENT INCOME—WITHOUT DONOR
RESTRICTIONS 686
INVESTMENT INCOME—WITH DONOR
RESTRICTIONS—PROGRAMS 1,269
Chapter 14 – Accounting for Not-for-Profit Organizations
14-30
Ch. 14, Solutions, Exercise 14-25, b. (Cont’d)
ART LEAGUE
GENERAL JOURNAL
Debits Credits
4. RENT EXPENSE 18,000
CONTRIBUTIONS—WITHOUT DONOR
RESTRICTIONS 18,000
5. SALARIES & BENEFITS EXPENSE 46,900
UTILITIES EXPENSE 3,080
PRINTING AND POSTAGE EXPENSE 1,310
6. CASH 2,900
SHORT-TERM INVESTMENTS 2,900
EQUIPMENT 2,835
CASH 2,835
Chapter 14 – Accounting for Not-for-Profit Organizations
14-31
Ch. 14, Solutions, Exercise 14-25, b. (Cont’d)
ART LEAGUE
GENERAL JOURNAL
Debits Credits
7. COMMUNITY ART EDUCATION 825
CASH 825
NET ASSETS RELEASED—SATISFACTION OF
PURPOSE RESTRICTION—WITH DONOR
8. DEPRECIATION EXPENSE 1,642
ALLOWANCE FOR DEPRECIATION—EQUIPMENT 1,642
9. EXHIBITION PROGRAM 21,472
COMMUNITY ART EDUCATION PROGRAM 21,472
SALARIES & BENEFITS EXPENSE 46,900
UTILITIES EXPENSE 3,080
PRINTING AND POSTAGE EXPENSE 1,310
10. PAYABLE TO ARTISTS 9,608
CASH 9,608