Chat8 Ch 14 JE Illustrations

Chat8 Ch 14 JE Illustrations - Chapter 14 Accounting for...

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Unformatted text preview: Chapter 14 Accounting for Not— oraProfit Organizations 605 Cash collected for unrestricted pledges totaled $68,500; collection of accounts receivable amounted to $2,200. Cash collected for restricted pledges made this year totaled $16,500. Cash in the amount of $9,200 was collected for pledges given dur- ing a building fund drive in the preceding year. Debits ' Credits 3a. Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,700 Contributions Receivable—Unrestricted . . . . . . . . . . . . . . . . . . ' 68,500 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,200 3b. Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,500 Contributions Receivable—Temporarily Restricted . . . . . . . . . . 16,500 3c. Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,200 Contributions Receivable—Temporarin Restricted . . . . . . . . . . 9,200 The organization sponsored a bazaar to raise funds for the Special Outreach Project. Direct costs of $3,000, not considered peripheral or incidental in nature, incurred for this event were paid in cash; the event yielded cash contributions of $10,000. 4a. Cash . . . . . . . . . . . . . , . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . 10,000 Contrlbutions—Temporarily Restricted—Program . . . . . . . . . . 10,000 4b. Direct Costs—Special Outreach Project—Program . . . . . . . . . . . 3,000 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000 The FY 2011 allocation from the United Way of Fairshare Bay amounted, in gross, to $317,000. Related fund—raising expenses to be borne by the Community Family Service Agency totaled $13,200; the net allocation was received in cash. 5. Cash . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . 303,800 Fund—Raising Support Expenses . . . . . . . . . . . . . . . . . . . , . . . . . . 13,200 Contributions—Unrestricted . . . . . . . . . . . . . , . . . . . . .. . . . . . . 317,000 Salaries expense for the year totaled $265,000, employee benefits expense totaled $51,000, and payroll taxes expense was $20,300. As of year-end, $15,100 of these expenses were unpaid; the balance had been paid in cash. 6. Salaries Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265,000 Employee Benefits Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,000 Payroll Taxes Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,300 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321,200 Accounts Payable and Accrued Expenses . . . . . . . . . . . . . . . . . 15,100 —————f 604 Part Three Note oraProfit Organizations ,' COMMUNITY FAMILY SERVICE AGENCY, INC. Trial Balance As of December 31, 2010 \ ‘ Debits Credits ' Cash is 58,711 Short—term Investments—Unrestricted 22,000 _ Short—term investments—Temporarily Restricted—Plant 20,000 ' Accounts Receivable 2,485 ' ' Allowance for Uncollectible Accounts Receivable $ 135 ‘ Contributions Receivable—Unrestricted 5,424 _ Allowance for Uncollectible Contributions—Unrestricted 259 1 Contributions Receivable—Temporarily Restricted . 10,470 -" Allowance for Uncollectible Contributions—Temperedly Restricted 288 .; Supplies 23,095 ' Prepaid Expense ' 3,917 Land—Temporarily Restricted 16,900 Building—Temporarily Restricted 58,000 - Allowance for Depreciation—Building 4,640 L Equipment—Temporarily Restricted 42,824 .- ’ Allowance for Depreciation—Equipment 9,136 Long-term investments—Unrestricted 17,000 " Long—term investments—Permanently Restricted 230,000 5 Accounts Payable and Accrued Expenses 25,911 Mortgage Payable 55,000 Unrestricted Net Assets—Undesignated—Available for Operations 67,302 ‘ Unrestricted Net Assets—Designated for Special Outreach Project 30,000 I' Temporarily Restricted Net Assets—Programs 3,900 , Temporarily Restricted Net Assets—Plant 79,130 g Temporarily Restricted Net Assets—Time 5,125 ' Permanently Restricted Net Assets 230,000 ,' Totals ~ $510,826 $510,826 ‘ I , Debits Credits : 1. Net Assets Released—Expiration of Time Restrictions—Temporarily ‘ ' Restricted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,125 Net Assets Released—Expiration of Time Restrictions—— i Unrestricted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,125 Pledges receivable resulting from the 2011 fund drive were recorded. Pledges of l $69,500 were unrestricted; in addition, pledges of $16,500 were donor restricted for " a special outreach project to be undertaken in 2011. ‘ 2a. Contributions Receivable—Unrestricted . . . . . . . . . . . . . . . . . . . . 69,500 r Contributions—Unrestricted . . . . . . . . . . . . . . . . . . . . . . . . . . 69,500 2b. Contributions Receivable—Temporarily Restricted .' . . . . . . . . . .. 16,500 Contributions—Temporarily Restricted—Program . . . . . . . . . . . 16,500 606 Part Three Not— or—Profit Organizations \ Expenses incurred for the Special Outreach Project were professional fees, $17,000; supplies, $4,500; and printing and publications, $1,600. All amounts were paid in cash. Debits Credits 7. Professional Fees Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,000 Supplies Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 Printing and Publications Expense . . . . . . . . . . . . . . . . . . . . . . . . . 1',600 Cash . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . 23,100 Expenses for program services and supporting services were professional fees, $43,000; supplies, $7,800; telephone, $9,800; postage and shipping, $7,800; occu— pancy, $23,900; rental and maintenance of equipment, $8,700; printing and publica- tions, $7,900; travel, $22,000; conferences, conventions, and meetings, $13,800; specific assistance to individuals, $30,000; membership dues, $700; awards and grants to national headquarters, $5,500; costs of sales to the public, $900; and miscellaneous, $4,200. All expenses were credited to accounts payable and accrued expenses. 8. Professional Fees Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,000 Supplies Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,800 Telephone Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,800 Postage and Shipping Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,800 Occupancy Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,900 Rental and Maintenance of Equipment Expense . . . . . . . . . . . . . . 8,700 Printing and Publications Expense . . . . . . . . . . . . . . . . . . . . . . . . 7,900 Travel Expense . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,000 Conferences, Conventions, and Meetings . . . . . . . . . . . . . . . . . . 13,800 Specific Assistance to Individuals . . . . . . . . . . . . . . . . . . . . . . . . . 30,000 Membership Dues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 700 Awards and Grants to National Headquarters . . . . . . . . . . . . . . . . 5,500 Cost of Sales to the Public . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900 Miscellaneous Expense . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . 4,200 Accounts Payable and Accrued Expenses .' . . . . . . . . . . . . . . . . 186,000 Unrestricted support and revenue were received in cash during 2011 from the fol— lowing sources: legacies and bequests, $15,000; membership dues from individuals, $1,000; program service fees, $55,000; investment income, $2,900; and miscella— neous, $1,500. In addition, $250 of net incidental revenue was collected in cash from advertisers for the Special Outreach Project. 9. Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,650 Contributions—Unrestricted . . . . . . . . . . . . . . . . , . . . . . . . . . . Membership Dues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Program Service Fees . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment Income—Unrestricted . . . . . . . . . . . . . . . . . . . . . . . Miscellaneous Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Contributions—Temporariiy Restricted—Program . . . . . . . . . . . Chapter 14 Accounting for Not, or—P'rofit Organizations 607 Sales to the public amounted to $1,000 gross for the year. None of this amount was collected by year—end. Debits Credits 10. Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 Sales to the Public . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 Accounts payable and accrued expenses paid in cash during; 2011 totaled $182,864. 11. Accounts Payable and Accrued Expenses . . . . . . . . . . . . . . . . . . 182,864 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182,864 Contributions received in cash in 2011 amounted to $20,000, of which $10,000 was specified by donors for use in 2012, $6,000 was temporarily restricted for a pro- gram, and $4,000 was temporarily restricted for plant. 12. Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i . . . i , . i . . 20,000 Contributions—Temporarily Restricted—Time . . . . . . . , . . . . . 10,000 Contributlons—Temporarily Restricted—Program . . . . . . . . . . 6,000 Contributions—Temporarily RestrictedflPlant . . . . . . . . . . . . . 4,000 Interest of $4,540 and $6,500 on the principal of the mortgage were paid. Short- term investments that were restricted for plant were sold at par, $5,000; the proceeds were used to purchase equipment. The organization’s policy is that there is an implied restriction on plant assets and that this restriction is satisfied as the assets are used (measured by depreciation expense). 13a. Miscellaneous EXpense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,540 Mortgage Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,500 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .‘ . . . . . . . . . . . 11,040 13b. Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. I . . . . . . . . .. 5,000 Short-Term Investments—Temporarily Restricted—Plant . . . . 5,000 13c. Equipment—Temporarily Restricted . . . . . . . . . . . . . . . . . . . . . 5,000 Cash . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 Interest received in cash on short—term investments restricted for the plant amounted to $1,390. Interest received in cash on investments of endowment funds amounted to $12,780. This income was not restricted by the donor. 14a. Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . 1,390 Investment Income—Temporarily Restricted—Plant . . . . . . . . 1,390 14b. Cash . . . . . . . . . . . . . . . . t . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,780 Investment Income—Unrestricted . . . . . . . . . . . . . . . . . . . . . 12,780 608 Part Three Nonferrl’rofit Organizations The Community Family Service Agency paid its national affiliates in accord with the affiliation agreements; the amount of the payment in 2011 was $8,574. Debits Credits 8,574 15. Payments to Affiliated Organizations . . . . . . . . . . . . . . . . . . . . . Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,574 At the end of the year, a local family donated $100,000 in cash to be held in per- petuity with any investment income or gains and losses (realized or unrealized) to be used at the discretion of management. 16. Cash 100,000 Contributions—Permanently Restricted . . . . . . . . . . . . . . . . . . 100,000 End-of-the-Year Adjusting Journal Entries A physical count of supplies, valued at the lower of cost or market, indicated the proper balance sheet value should be $19,100, a decrease of $3,995 during the year. Prepaid expenses at year—end were $3,600; the decrease of $317 is chargeable to postage and shipping expense. 17a. Supplies Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . 3,995 Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,995 17b. Postage and Shipping Expense . . . . . . . . . . . . . . . . . . . . . . . . . . 317 317 Prepaid Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . An analysis of the investment accounts indicated that the fair value of the long- term investments had decreased. The long-term investments for endowment had a fair value of $226,000 at the end of the year,35 and the unrestricted long—term invest- ments were valued at $14,000, a decrease of $4,000 and $3,000, respectively. Short- term investments and investments for land, building, and equipment did not change. r 4,000 3,000 18. Unrealized Loss on Investments—Permanently Restricted i . . . . . . Unrealized Loss on InvestmentsFUnrestricted . . . . . . . . . . . . . . . Long—Term Investments—Permanently Restricted . . . . . . . . . . . Long-Term Investments—Unrestricted . . . . . . . . . . . . . . . . . . . 4,000 3,000 The allowance for uncollectible accounts receivable appeared adequate and net excessive, but the allowance for uncollectible unrestricted pledges should be increased by $104. This adjustment relates to current period um‘estricted contribu- tions (see Entry 2a). 35 FASB SFAS No. 724 requires that investment losses on endowments be reported as a decrease in either temporarily restricted or unrestricted net assets, unless donor stipulations or law require that the loss be reported as a decrease in permanently restricted net assets. We assume that such a donor stipulation or law exists for this endowment. Chapter 14 Accounting forNot» OPProfit Organizations 609 Debits Credits 19. Contributions—Unrestricted . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 Allowance for Uncollectible Contributions—Unrestricted . . . . . 104 Depreciation on buildings and equipment belonging to the Community Family Service Agency is recorded in the amounts shown in Entry 20a. Since the depreci- ation reduced the carrying value of the capital assets, a reclassification is made for the net assets temporarily restricted for plant released from restriction. 20a. Depreciation of Buildings and Equipment . . . . . . . . . . . . . . . . . . 4,185 Allowance for Depreciation—Building . . . . . . . . . . . . . . . . . . 1,145 Allowance for Depreciation—Equipment . . . . . . . . . . . . . . . . 3,040 20b. Net Assets Released—Satisfaction of Plant Restrictions— Temporarily Restricted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,185 Net Assets Released—Satisfaction of Plant Restrictions— Unrestricted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,185 End-of-the-Year Reclassification Journal Entries Miscellaneous expenses for mortgage interest (in Entry 13a) and depreciation expense (in Entry 20a) were allocated to program services and supporting services. The allocation is assumed to be as shown in Entry 21. 21. Counseling Program Expenses . r . . . . . . . . . . . . . . . . . . . . . . . . 2,480 Adoption Program Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 990 Foster Home Care Program Expenses . . . . . . . . . . . . . . . . . . . . . 2,510 Special Outreach Project Program Expenses . . . . . . . . . . . . . . . . 2,050 Management and General Support Expenses . . . . . . . . . . . . . . . 530 Fund-Raising Support Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 165 Miscellaneous Expense . r . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,540 Depreciation of Buildings and Equipment . . . . . . . . . . . . . . . . 4,185 The natural classification of expenses in Entry 7 were allocated to the Special Out— reach Project. 22. Special Outreach Project Program Expenses . . . . . . . . . . . . . . . . 23,100 Professional Fees Expense . . . . . . . . . . . . . . . . . . . . . . . i . . . . 17,000 Supplies Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 Printing and Publications Expense . . . . . . . . . r . . . . . . . . . . . r 1,600 The remaining natural classification of expenses (in Entries 6, 8, and 17b) were allocated to the various program and support categories in the assumed amounts shown in Entry 23, except Costs of Sales to the Public (Entry 8), which will be net— . ted with Sales to the Public. ...
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Chat8 Ch 14 JE Illustrations - Chapter 14 Accounting for...

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