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.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
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
- 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.
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