. 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
Revenue
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
research.
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)

Debits

Credits

Cash and Cash Equivalents

$3,278

Investments

$29,387

Accounts Receivable

$1,957

Allowance for Uncollectible Receivables

$137

Due from State

$79,626

Inventories

$869

Cash and Cash Equivalents–Restricted

$6,716

Investments–Restricted

$71,883

Depreciable Capital Assets

$184,620

Accumulated Depreciation

$28,850

Nondepreciable Assets

$89,481

Accounts Payable

$2,306

Accrued Liabilities

$2,039

Unearned Revenue

$13,789

Compensated Absences -Current Portion

$1,538

Bonds Payable

$92,116

Compensated Absences

$37,662

Net Position–Net Investment in Capital Assets

$158,715

Net Position–Restricted for Debt Service–Expendable

$1,157

Net Position–Restricted for Capital Projects–Expendable

$49,272

Net Position – Restricted for Endowment–Nonexpendable

$39,959

Net Position–Unrestricted

$36,559

Tuition and Fees

$30,095

Tuition and Fees Discount and Allowances

$7,565

Grants and Contracts Revenue

$18,196

Auxiliary Enterprise Sales

$14,595

Investment Income

$1,745

State Appropriations

$44,894

Capital Appropriations

$12,785

Institutional Support Expenses

$26,268

Academic Support Expenses

$58,940

Scholarships and Fellowships Expense

$7,664

Depreciation Expense

$5,580

Interest Expense

$378

Auxiliary Enterprise Expenses

$12,197

Totals

$586,409

$586,406

Information on Cash and Cash Equivalents Activity

Beginning Cash Balance

$8,067

Received Tuition and Fees (net)

$23,609

Received Grants and Contracts

$12,940

Received from Auxiliary Enterprises

$13,765

Payments to Employees

$58,220

Payments to Vendors

$21,711

Payments to Students for Scholarships and Fellowships

$7,664

Received State Appropriations

39,894

Received Capital Appropriations

20,540

Purchase of Capital Assets

20,634

Interest Paid on Debt

2,095

Interest Income

1,503

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