Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Question
Chapter 18, Problem 43P
a.
To determine
Determine the change in assets for the current year.
b.
To determine
Determine the change in assets and expense for the current year.
b.
To determine
Determine the change in assets and expense for the current year.
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You are preparing a statement of activities for the University of Richland, a private not-for-profit entity. The following questions should be viewed as independent of each other.
Part-1
During the current year, a donor gives $400,000 in cash to the school and stipulates that it must hold this money forever. However, any investment income earned on this money must be used for faculty salaries. During the current year, the investment earned $31,000 and, of that amount, the school has expended $22,000 appropriately to date. As a result of these events, what was the overall change in each of the following for the current year?
Unrestricted net assets.
Temporarily restricted net assets.
Permanently restricted net assets.
Part-2
A donor gives a large machine to the school on January 1 of the current year. It has a value of $200,000, no salvage value, and a 10-year life. The donor requires that the school keep the machine and use it for all 10 years, and the school agrees. It cannot sell…
You are preparing a statement of activities for the University of Richland, a private not-for-profit entity. The following questions should be viewed as independent of each other.Part 1During the current year, a donor gives $400,000 in cash to the school and stipulates that it must hold this money forever. However, any investment income earned on this money must be used for faculty salaries. During the current year, the investment earned $31,000 and, of that amount, the school has expended $22,000 appropriately to date. As a result of these events, what was the overall change in each of the following for the current year?a. Unrestricted net assets.b. Temporarily restricted net assets.c. Permanently restricted net assets.Part 2 A donor gives a large machine to the school on January 1 of the current year. It has a value of $200,000, no salvage value, and a 10-year life. The donor requires that the school keep the machine and use it for all 10 years, and the school agrees. It cannot sell…
During the year, Private College received the following: An unrestricted $10,000 pledge to be paid the following year. A $70,000 cash gift restricted for scholarships. A notice from a recent graduate that the college is named as a beneficiary of $25,000 in that graduate's will. What amount of contribution revenue should Private College report in its statement of activities?
A.) $10,000
B.) $70,000
C.) $105,000
D.) $80,000
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- 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.a. Charged students $1.2 million in tuition.b. 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.c. Received a cash donation of $700,000 that must be used to acquire laboratory equipment.d. Gave scholarships in the amount of…arrow_forwardThe 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…arrow_forward1. A donor contributed $100,000 in cash to Goodwill Industries in 2020. The donor specified that the contribution be held as a permanent endowment, and income from investment of the contribution be used for job training programs. Goodwill Industries invested the $100,000 in securities in 2020. During 2021, investment income of $3,000 was received in cash, and $2,500 was used for job training programs. How does Goodwill Industries report this on its 2021 statement of activities? Select one: A. $3,000 investment income increases net assets without donor restrictions; $2,500 expense decreases net assets without donor restrictions. B. $3,000 investment income increases net assets with donor restrictions; $2,500 net assets released from use restrictions decreases net assets with donor restrictions and increases net assets without donor restrictions; $2,500 expense reduces net assets without donor restrictions. C. $3,000 investment income increases net assets without donor restrictions;…arrow_forward
- Following are several transactions involving a university. In the current fiscal year, the university was notified by the federal government that next fiscal year it would receive a $480,000 grant for wetlands research. The grant must be used during the next fiscal year. The university received a $500,000 endowment. For the fiscal year, the university recorded $2,400,000 in tuition and fees revenue. Cash refunds of $313,000 were given. The university provided $12,200 in tuition waivers for students with outstanding academic performance. During the year, the university constructed a new street, to allow for the expansion of its student housing efforts. The cost of the street was $1,978,000. The biology department spent $25,000 on wetlands research. At year-end, $1,670 of estimated uncollectible tuition and fees was recorded. Required 1. Prepare journal entries to record the foregoing transactions, assuming the university is a private institution. 2. Prepare journal entries to record the…arrow_forwardRecord the following events that affect (1) Public University and (2) Private University: a. A private grant of $200,000 was received to be used exclusively for defraying costs of holding conferences on the topic of genes. b. By year-end, $110,000 of the grant mentioned in item (a) had been applied to the purpose stipulated. c. The grant provided that amounts not awarded by year-end are to be transferred to the endowment fund. The liability to that fund is recorded. d. An alumnus, who was a former athlete, contributed $15,000 to assist in the search for a basketball coach.arrow_forwardIn the current year, the not-for-profit organization Save the Butterflies Foundation received cash of $500 to be used as the Foundation wishes and $1,000 to be used for butterfly research. Save the Butterflies also received pledges of $700 that it can use as it wishes and $600 for its building fund. All pledges are expected to be received next year. How much would Save the Butterflies report as contributions with donor restrictions in the current year? 4 O $1,600. O $1,000. O $2,300. O $1,300.arrow_forward
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- Palestine College, a not-for-profit institution, engaged in the following transactions during its fiscal year ending June 30, 2018. Prepare appropriate journal entries, indicating the net asset category affected (with donor restrictions or without donor restrictions). 1. The college collected student tuition $8 million as follows: $1,500,000 was applicable to the Summer Semester, which ran from June 1 to August 30, and the rest was applicable to the coming Fall Semester (September-December). 2. Using funds restricted for this purpose, the college purchased $300,000 of equipment for their movie theater. The college charged depreciation of $30,000. 3. The annual alumni campaign yielded $2,800,000 in pledges. The college estimated that 2 percent would be uncollectible. During the year the college collected $2,400,000 on the pledges.arrow_forwardEdwards Center for GNP Accounting, a nonprofit organization, receives a letter from a donor that includes a promise to donate $100,000 in the next fiscal year provided the Center raise an equal amount of cash from other donors. What journal entry will be recorded when the letter is received? No journal entry would be recorded. Debit cash $100,000; credit refundable advance $100,000 Debit pledge receivable $100,000; credit contribution revenue with donor restrictions $100,000 Debit pledge receivable $100,000; credit contribution revenue without donor restrictions $100,000 Debit pledge receivable $100,000; credit refundable advance $100,000arrow_forwardRecording journal entries for nonprofits 6. Donor D advises a university that he has established an irrevocable charitable remainder trust, administered by his attorney, whereby his wife will receive income from the trust as long as she lives. At her death, the remaining trust assets will be distributed to the university as a permanent endowment. The university’s actuary estimates the fair value of the university’s beneficial interest to be $400,000 (answer question 6 - what should be the correct entry?)arrow_forward
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