. Classification of Revenues/Support and Expenses.
For each of the independent transactions listed below, indicate which of
the listed revenue or contribution classifications apply by choosing
one or more of the letters from the listed items. Choose all that apply.Transaction
A museum gift shop sold prints of famous paintings.
At the end of the year a donor agreed to contribute $400,000 to a
local artists’ fund if the museum raised a matching amount in the first
quarter of the upcoming year.
A registered nurse volunteered 10 hours a week to a local agency for disabled persons.
A donor contributed $1 million to a not-for-prof it hospital for a new clinic.
An NFP art association hosted its annual art exhibition for the association’s major contributors.
A donor contributed securities valued at $10 million to be
permanently invested. Earnings thereon are stipulated by the donor to be
used for eye research.
A local computer store donated computers for children’s use at an NFP hands-on children’s museum.
A local PTA received cash contributions of $2,000 to be used for its operating activities.
Revenue and Contribution Classifications
Contributions – Unrestricted
Contributions – Temporarily Restricted
Contribution – Permanently Restricted
None of the above.
2. Recording and Reporting Transactions. INVOLVE was
incorporated as a not-for-prof it voluntary health and welfare
organization on January 1, 2017. During the fiscal year ended December
31, 2017, the following transactions occurred.
A business donated rent-free office space to the organization that would normally rent for $35,000 a year.
A fund drive raised $185,000 in cash and $100,000 in pledges that
will be paid within one year. A state government grant of $150,000 was
received for program operating costs related to public health eduction.
Salaries and fringe benefits paid during the year amounted to
$208,560. At year-end, an additional $16,000 of salaries and fringe
benefits were accrued.
A donor pledged $100,000 for construction of a new building payable
over the following five fiscal years, commencing in 2019. The discounted
value of the pledge is expected to be $94,260. Office equipment was
purchased for $12,000. The useful life of the equipment is estimated to
be five years. Office furniture with a fair value of $9,600 was donated
by a local office supply company. The furniture has an estimated useful
life of 10 years. Furniture and equipment are considered unrestricted
net assets by INVOLVE.
Telephone expense for the year was $5,200, printing and postage
expense was $12,000 for the year, utilities for the year were $8,300,
and supplies expense was $4,300 for the year. At year-end, an immaterial
amount of supplies remained on hand and the balance in accounts payable
was $3,600.
Volunteers contributed $15,000 of time to help with answering the
phones, mailing materials, and various other clerical activities.
It is estimated that 90 percent all of the pledges made for the 2018
year will be collected. Depreciation expense is recorded for the full
year on the assets recorded in item 5.
Salaries and wages were allocated to program services and support
services in the following percentages: public health education, 35
percent; community service, 30 percent; management and general, 20
percent; and fund-raising, 15 percent. All other expenses were allocated
in the following percentages: public health education, 35 percent;
community service, 20 percent; management and general, 25 percent; and
fund- raising, 20 percent.
Net assets were released to reflect satisfaction of state grant
requirements that the grant resources be used for program purposes.
All nominal accounts were closed to the appropriate net asset accounts.
Using this information
Make all necessary journal entries to record these transactions.
Expense transactions should be initially recorded by object
classification; in entry 10 expenses will be allocated to functions.
Prepare a statement of activities for the year ended December 31, 2017.
Prepare a statement of financial position for the year ended December 31, 2017.
Prepare a statement of cash flows for the year ended December 31, 2017.
Prepare a statement of functional expenses for the year ended December 31, 2017.
3. Various Unrelated Transactions. Following are several unrelated transactions involving a university.
In fiscal year 2017, the university was notified by the federal
government that in 2018 it would receive a $600,000 grant for wetlands
The university received a $600,000 endowment.
For the fiscal year, the university recorded $3,500,000 in tuition and fees revenue. Cash refunds of $325,000 were given.
The university provided $12,600 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 $1,980,000.
The biology department spent $25,000 on wetland research.
At year-end, $2,670 of estimated uncollectible tuition and fees was recorded.
Using this information
Prepare journal entries to record the foregoing transactions, assuming the university is a private institution.
Prepare journal entries to record the foregoing transactions, assuming the university is a public institution.
4. Financial Statements – Public College. The following balances come from the trial balance of Wilson State College as of the end of the 2017 fiscal year.

WILSON STATE COLLEGEPre-closing Trial BalanceJune 30, 2017 (000s omitted)



Cash and Cash Equivalents




Accounts Receivable


Allowance for Uncollectible Receivables


Due from State




Cash and Cash Equivalents–Restricted




Depreciable Capital Assets


Accumulated Depreciation


Nondepreciable Assets


Accounts Payable


Accrued Liabilities


Unearned Revenue


Compensated Absences -Current Portion


Bonds Payable


Compensated Absences


Net Position–Net Investment in Capital Assets


Net Position–Restricted for Debt Service–Expendable


Net Position–Restricted for Capital Projects–Expendable


Net Position – Restricted for Endowment–Nonexpendable


Net Position–Unrestricted


Tuition and Fees


Tuition and Fees Discount and Allowances


Grants and Contracts Revenue


Auxiliary Enterprise Sales


Investment Income


State Appropriations


Capital Appropriations


Institutional Support Expenses


Academic Support Expenses


Scholarships and Fellowships Expense


Depreciation Expense


Interest Expense


Auxiliary Enterprise Expenses





Information on Cash and Cash Equivalents Activity

Beginning Cash Balance


Received Tuition and Fees (net)


Received Grants and Contracts


Received from Auxiliary Enterprises


Payments to Employees


Payments to Vendors


Payments to Students for Scholarships and Fellowships


Received State Appropriations


Received Capital Appropriations


Purchase of Capital Assets


Interest Paid on Debt


Interest Income


Using this information
Prepare a statement of revenues, expenses, and changes in net
position for the year ended June 30, 2017, in good form. See
Illustrations 15­2 and 7­6; however, display expenses using functional
classifications as shown in Illustration 15­6.
Prepare a statement of net position as of June 30, 2017, in good
form. For the period, net position restricted for capital projects
increased by $3,000, and net position restricted for debt service
increased by $150; all bonded debt relates to capital assets. See
Illustration 15­1.
Prepare a statement of cash flows for the year ended June 30, 2017.
Information on changes in assets and liabilities is as follows: Accounts
Receivable (net) increased by $2,551; Due from State decreased by
$14,842; Inventories increased by $23; Accounts Payable and Accrued
Liabilities increased by $1,962; and Unearned Revenue decreased by
$1,763. See Illustration 15­3