Concept explainers
a.
Prepare journal entries to record the transactions for the year ended June 30, 2020.
a.
Explanation of Solution
Prepare journal entries to record the transactions for the year ended June 30, 2020:
Date | Particulars | Post ref. | Debit | Credit |
1 | Accounts receivable - Investment and fees | $1,250,000 | ||
Tuition and fees discount and allowances | $250,000 | |||
Revenues - Tuition and fees | $1,500,000 | |||
( To record the tuition revenue) | ||||
2 | Unearned revenue - Tuition and fees | $25,000 | ||
Revenues - Tuition and fees | $25,000 | |||
( To record the unearned tuition revenue) | ||||
3 | No entry (Refer note) | |||
4 | Cash | $3,000,000 | ||
Revenues - State appropriations | $3,000,000 | |||
(To record the receipt of unrestricted state appropriation) | ||||
5 | Capital assets | $525,000 | ||
Cash | $525,000 | |||
(To record the purchase of equipment) | ||||
6 | Cash | $800,000 | ||
Revenues - gifts and grants | $800,000 | |||
(To record the cash receipts from contributions from alumni) | ||||
7 | Interest expenses | $48,000 | ||
Cash | $48,000 | |||
(To record the cash payment made for interest expense) | ||||
8 | Revenues - Tuition and fees | $113,000 | ||
Cash | $113,000 | |||
(To record the refund of tuition fees) | ||||
Cash | $1,471,700 | |||
Accounts receivable – Tuition and fees | $1,320,700 | |||
Unearned revenue | $138,000 | |||
Revenues – Investment income | $13,000 | |||
( To record the cash receipts) | ||||
9 | General expenses | $468,400 | ||
Research expenses | $37,000 | |||
Accounts payable | $4,721,000 | |||
(To record the cash payment made for research and general expense) | ||||
Accounts payable (1) | $4,751,000 | |||
Cash | $4,751,000 | |||
(To record the cash payment made to creditors) | ||||
Grant receivable | $37,000 | |||
Revenues - gifts and grants | $37,000 | |||
(To record the grant receivable) | ||||
10 | Accrued liabilities | $40,000 | ||
Cash | $40,000 | |||
(To record the cash payment made for accrued liabilities) | ||||
11 | Provision for | $2,000 | ||
Allowance for doubtful accounts | $2,000 | |||
(To record the allowance for doubtful debts for the year) | ||||
Expenses - | $90,000 | |||
$90,000 | ||||
(To record the depreciation expense for the year) | ||||
Interest receivable | $1,250 | |||
Revenues - Investment income | $1,250 | |||
(To record the accrued interest from investments) | ||||
Investments | $12,000 | |||
Revenues - changes in fair value of Investments | $12,000 | |||
(To record the increase in the fair value of investments) | ||||
12 | Revenues - Tuition and fees | $1,412,000 | ||
Revenues - State appropriations | $3,000,000 | |||
Revenues - Gifts and grants | $837,000 | |||
Revenues - Changes in fair value of Investments | $12,000 | |||
Revenues - Investment income | $14,250 | |||
Tuition and fees discount and allowances | $250,000 | |||
Interest expenses | $48,000 | |||
General expenses | $4,684,000 | |||
Research expenses | $37,000 | |||
Provision for bad debts | $2,000 | |||
Depreciation expenses | $90,000 | |||
Unrestricted net position | $164,250 | |||
(To record the closing of nominal accounts) | ||||
Net position - Unrestricted | $435,000 | |||
Net position—Net investment in capital assets | $435,000 | |||
(To reclassify the net position) | ||||
Net position—Unrestricted | $205,230 | |||
Net position—Restricted | $205,230 | |||
(To reclassify the net position) |
Table (1)
Note:
- For journal entry 3: The central government published a notification that states that up to $50,000 could be given to the colleges for developing measures for the performance of students. However, the eligibility requirement is not met and such transactions are not recorded in the journal.
Working note 1: Determine the cash paid to accounts payable:
a.
Prepare a statement of net position for the year ended June 30, 2020.
a.
Explanation of Solution
Prepare a statement of net position for the year ended June 30, 2020:
University SS | ||
Statement of net position | ||
For the year ended June 30, 2019 | ||
Assets | Amount | Amount |
Cash | $134,700 | |
Accounts receivable (Net of doubtful accounts of $17,000) | $297,300 | |
Interest receivable | $1,250 | |
Grant receivable | $37,000 | |
Investments | $262,000 | |
Capital assets | $2,275,000 | |
Less: Accumulated depreciation | ($365,000) | $1,910,000 |
Total assets | $2,642,250 | |
Liabilities | ||
Accounts payable | $75,000 | |
Unearned revenue | $138,000 | |
Bonds payable | $600,000 | |
Total liabilities | $813,000 | |
Net position | ||
Net Investment in capital assets | $1,310,000 | |
Restricted | $420,230 | |
Unrestricted | $99,020 | |
Total net position | $1,829,250 |
Table (2)
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