The University of Danville is a private not-for-profit university that starts the current year with $700,000 in net assets: $400,000 unrestricted, $200,000 temporarily restricted, and $100,000 permanently restricted. The following transactions occur during the year. Prepare journal entries for each transaction. Then determine the end-of-year balances for unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets by creating a statement of activities. Charged students $1.2 million in tuition. Received a donation of investments that had cost the owner $100,000 but was worth $300,000 at the time of the gift. According to the gift’s terms, the university must hold the investments forever but can spend the dividends for any purpose. Any changes in the value of these securities must be held forever and cannot be spent. Received a cash donation of $700,000 that must be used to acquire laboratory equipment. Gave scholarships in the amount of $100,000 to students. Paid salary expenses of $310,000 in cash. Learned that a tenured faculty member is contributing his services in teaching for this year and will not accept his $80,000 salary. Spent $200,000 of the money in (c) on laboratory equipment (no time restriction is assumed on this equipment). Learned that at the end of the year, the investments in (b) are worth $330,000. Received dividends of $9,000 cash on the investments in (b). Computed depreciation expense for the period of $32,000. The school’s board of trustees decides to set aside $100,000 of previously unrestricted cash for the future purchase of library books. Received an unconditional promise of $10,000, which the school fully expects to collect in three years although its present value is only $7,000. The school assumes that the money cannot be used until the school receives it. Received an art object as a gift that is worth $70,000 and that qualifies as a work of art. The school prefers not to record this gift. Paid utilities and other general expenses of $212,000.

Answered: The University of Danville is a private not-for-profit university that starts the current year with $700,000 in net assets: $400,000 unrestricted, $200,000…

FINANCIAL ACCOUNTING

10th Edition

ISBN: 9781259964947

Author: Libby

Publisher: MCG

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Question

The University of Danville is a private not-for-profit university that starts the current year with $700,000 in net assets: $400,000 unrestricted, $200,000 temporarily restricted, and $100,000 permanently restricted. The following transactions occur during the year.

Prepare journal entries for each transaction. Then determine the end-of-year balances for unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets by creating a statement of activities.

Charged students $1.2 million in tuition.
Received a donation of investments that had cost the owner $100,000 but was worth $300,000 at the time of the gift. According to the gift’s terms, the university must hold the investments forever but can spend the dividends for any purpose. Any changes in the value of these securities must be held forever and cannot be spent.
Received a cash donation of $700,000 that must be used to acquire laboratory equipment.
Gave scholarships in the amount of $100,000 to students.
Paid salary expenses of $310,000 in cash.
Learned that a tenured faculty member is contributing his services in teaching for this year and will not accept his $80,000 salary.
Spent $200,000 of the money in (c) on laboratory equipment (no time restriction is assumed on this equipment).
Learned that at the end of the year, the investments in (b) are worth $330,000.
Received dividends of $9,000 cash on the investments in (b).
Computed depreciation expense for the period of $32,000.
The school’s board of trustees decides to set aside $100,000 of previously unrestricted cash for the future purchase of library books.
Received an unconditional promise of $10,000, which the school fully expects to collect in three years although its present value is only $7,000. The school assumes that the money cannot be used until the school receives it.
Received an art object as a gift that is worth $70,000 and that qualifies as a work of art. The school prefers not to record this gift.
Paid utilities and other general expenses of $212,000.