CHAPTER 16NONPROFIT ORGANIZATIONS The title of each problem is followed by the estimated time in minutes required for completion and by a difficulty rating. The time estimates are applicable for students using the partially filled-in working papers. Pr. 16–1 Seaside Hospital (30 minutes, easy) Preparation of statement of activities for a nonprofit hospital that has only a general fund. Pr. 16–2 Holley School (30 minutes, medium) Journal entries for transactions and events of a nonprofit private secondary school, in unrestricted fund, quasi-endowment fund, and plant fund. Pr. 16–3 Nonprofit Trade Association (30 minutes, medium) Preparation of a statement of activities and a statement of financial position for a nonprofit trade association that does not use fund accounting. Pr. 16–4 Suburban Welfare Services (50 minutes, medium) Working paper to compute original and revised equity percentages for funds of a nonprofit voluntary health and welfare organization in an investment pool. Journal entries for unrestricted fund for operations of the investment pool. Pr. 16–5 Harbor Hospital (50 minutes, medium) Journal entries for transactions and events of general fund, restricted fund, and annuity fund of a nonprofit hospital. Pr. 16–6 Wigstaff Foundation (50 minutes, medium) Preparation of a statement of cash flows for a nonprofit research and scientific organization, in the indirect method format. Pr. 16–7 Mid-City Sports Club (50 minutes, medium) Preparation of journal entries (explanations omitted) for events and transactions of a nonprofit social club. Also, preparation of a statement of activities and a statement of financial position. Pr. 16–8 State University (60 minutes, strong) Journal entries for transactions and events of a nonprofit university's unrestricted fund, restricted fund, and endowment fund. Pr. 16–9 Resthaven Hospital (60 minutes, strong) Journal entries for transactions and events of a nonprofit hospital's general fund, plant replacement and expansion fund, and endowment fund. Pr. 16–10 Libra College (60 minutes, strong) Journal entries for unrestricted fund and restricted fund of a nonprofit college; preparation of statement of changes in fund balances. Pr. 16–11 Disadvantaged Children Association (60 minutes, strong) Preparation of financial statements, excluding a statement of cash flows, for a nonprofit voluntary health and welfare organization. The McGraw-Hill Companies, Inc., 2006 184 Modern Advanced Accounting, 10/e ANSWERS TO REVIEW QUESTIONS 1. 2. 3. 4. 5. 6. A nonprofit organization is an entity that is usually operated for the benefit of society as a whole, rather than for the benefit of an individual proprietor or a group of partners or stockholders. The concept of "net income" is not meaningful for a nonprofit organization. Among the types of nonprofit organizations in the United States are the following (only four required): Cemetery organizations Private and community foundations Civic organizations Private elementary and secondary schools Colleges and universities Professional associations Cultural institutions Public broadcasting stations Fraternal organizations Religious organizations Hospitals Research and scientific organizations Labor unions Social and country clubs Libraries Trade associations Museums Voluntary health and welfare organizations Performing arts organizations Zoological and botanical societies Political parties Each of the AICPA Accounting and Auditing Guides or Industry Audit Guides dealing with nonprofit organizations contains a section that indicates that the accounting concepts included therein have the substantial authoritative support required for generally accepted accounting principles. Characteristics of nonprofit organizations resembling those of governmental entities include the following (only three are required): (1) Service to society. Nonprofit organizations render services to society as a whole. (2) No profit motivation. Nonprofit organizations do not operate with the objective of earning a net income. (3) Financing by the citizenry. Most nonprofit organizations depend on the general population for a substantial portion of their support because revenues from services generally do not cover all their operating costs. (4) Stewardship for resources. Because a substantial portion of the resources of a nonprofit organization is contributions, the organization must account for the resources on a stewardship basis. (5) Importance of budget. The annual budget is important for a nonprofit organization because of the four preceding characteristics. Characteristics of nonprofit organizations that resemble those of business enterprises include the following: (1) Governance by board of directors. A nonprofit organization is governed by elected or appointed directors, trustees, or governors. (2) Measurement of cost expirations. Cost expirations, or expenses, rather than expenditures, generally are reported in the statement of activities of a nonprofit organization. (3) Use of accrual basis of accounting. Nonprofit organizations employ the accrual basis of accounting. Both hospitals and universities (nonprofit organizations) accrue their basic revenue charges to patients and students, respectively, at gross amounts, before reductions for allowances, remissions, and the like. The latter are recorded in revenue-offset accounts by hospitals and generally with expenses for student aid by universities. The McGraw-Hill Companies, Inc., 2006 185 Modern Advanced Accounting, 10/e b. A nonprofit organization's life income fund records assets contributed with the stipulation that income from the assets be paid periodically to named recipients during their lifetimes. e.000 The McGraw-Hill Companies.. c 13. d. a 7. c 5. c 12.000 – $80. 16–1 1. The contributed services are recorded as salaries expense and as revenues at an appropriate rate. a. A pledge is a commitment by a prospective donor to contribute a specific amount of cash or property to a nonprofit organization on a future date or in installments. A nonprofit organization records contributed material in its accounting records at the current fair value of the material when contributed. Failure to record contributed material would understate assets and revenues at the time of the contribution and would understate expenses when the material was used in operations. Blue Cross. d 2. Designated Fund Balance is a ledger account in a nonprofit organization's unrestricted fund that is used to record the board of directors' earmarking of unrestricted fund resources for a specific purpose. 2006 186 . the "Collections" caption in the statement of financial position is referenced to a note in the financial statements that describes the collections. a 9. and private medical insurance carriers. b. A third-party payor is an organization that is liable for payment of many hospital receivables. A term endowment fund is a fund whose principal may be expended by the nonprofit organization after the passage of a period of time or the occurrence of an event specified by the donor of the endowment principal. less any meals or living costs incurred by the organization for the donor of the services. c 3. government (Medicare and Medicaid programs). The financial statements issued by a nonprofit organization are a statement of activities. and a statement of cash flows. Chapter 16 8. c 10. a Ex. SOLUTIONS TO EXERCISES Ex.7. 13. Examples of third-party payors are the U. 12. Collections often are not assigned a value in the financial statements of a nonprofit museum. 2006: Accounts Receivable Patient Service Revenues Solutions Manual. 16–2 Journal entries for Neighborhood Hospital. Unpaid amounts of grants that may be revoked by the board of trustees of a nonprofit performing arts organization are not recognized as expenses until they are paid. 9. c. b 6. there being no expectation of resultant cash flows to the hospital. Inc. instead of the patients receiving the hospital's services. May 31.S. 8. e ($620. Expenses of a nonprofit organization that receives significant support from the public are classified on a functional basis that differentiates between program services expenses and supporting services expenses. Instead. 11.000 860. a 4. d 860. a statement of financial position. for a stipulated time period.000 = $540. Charity care is health services provided by nonprofit hospitals to indigent patients. 10.000) 11. A nonprofit organization records contributed services in its accounting records only if the services were rendered to the organization under specified conditions. A nonprofit organization's annuity fund records assets contributed with the requirement that the organization pay specified fixed amounts periodically to named recipients. a. 000 32. 16–7 6.000 Contractual Adjustments Accounts Receivable 140.000 In statement of financial position Accounts receivable (net of allowance for doubtful accounts. 31. Oct. $18.. 31.000 Accounts Receivable Patient Service Revenues Ex. Journal entry for Cordova Hospital General Fund. 2006: In statement of activities Patient service revenues (net of contractual adjustments. 10/e . 2006: Accounts Receivable Patient Service Revenues 200. 2006 187 16.000 50.000 20.000 Contributions Revenue To record contribution of library books by various publishers.Accounts Receivable Patient Service Revenues 50.000 Journal entry for University of South Park Unrestricted Fund.400 Journal entries for Recuperative Hospital.400 – $180) Contributions Revenue To record contributed services at current fair value. 2006: Inventories Contributions Revenue To record difference between current fair value ($6. 31. Journal entry for Warner College Unrestricted Fund.) The McGraw-Hill Companies. 16–5 Ex. June 15.220 3. (Tax withholdings are disregarded. 2006: Library Books 16. Inc. $14.400) and nominal cost ($200) of medicine and drugs as support from contributed material. Oct. 16–4 20.600) $208. 16–3 Ex.000 24.200 6.000 Contractual Adjustments Accounts Receivable 32.000 6.000 200. Mar.200 3.000 6.000 Doubtful Accounts Expense Allowance for Doubtful Accounts 24. 2006: Salaries Expense ($3.500) $223.220 Modern Advanced Accounting. less value of meals provided to donors.000 Doubtful Accounts Expense Allowance for Doubtful Accounts Ex. 16–6 Ex.000 140.000 Financial statement presentation of Redwood Hospital for month of Sept.. 000 x 0.200 The McGraw-Hill Companies.000 = 25%) of realized and unrealized gains of investment pool for the year.000 x 0.40) Annuity Payable Solutions Manual. 2006: Investments in Securities ($10. Journal entry for Wilmington College Annuity Fund.000 Rent Expense Contributions Revenue To record current fair value of rental of storage facilities whose use was contributed. Nov. 2006: Salaries Expense Contributions Revenue To record contributed services of docents for the year. Unrestricted Fund.12) Contributions Revenue ($300.000 = 35%) of realized and unrealized gains of investment pool for the year. 2006 188 ..000 ÷ $360.000 96.000 7.000 500.000 7.500 Interest and Dividends Revenue To record 25% share of earnings of investment pool for the year. 16–9 96.000 Allowance for Doubtful Pledges Pledges Receivable 30.200 11.000 x 0.000 ÷ $360.000 Ex.500 Cash ($18. June 30.000 Provision for Doubtful Pledges ($500. 2006: Pledges Receivable Contributions Revenue 500. Inc.25) Gains on Securities Investments To record 25% share ($90.500 6. 60.000 – $15. Chapter 16 4.500 3. 2006: Pledges Receivable Provision for Doubtful Pledges Allowance for Doubtful Pledges ($60. June 30.000 x 0. 16–11 Journal entries for Wilmington College Restricted Fund. 2006: Investments in Securities ($10.000 Cash 240. 2006: Investments in Securities ($10. Ex.20) Allowance for Doubtful Pledges 100.000 100. 2.000 30.000) To adjust accounting for pledges from cash basis to accrual basis of accounting required for nonprofit hospitals.000 Journal entries for Community Welfare.000 x 0.000 Ex. Journal entries for Wilmington College Quasi-Endowment Fund.300 4.200 25.Ex.35) 3. 68. 16–8 Journal entries for Modern Museum.000) Fund Balance ($50.40) Cash ($18. Cash ($18.500 Gains on Securities Investments To record 35% ($126.000 x 0.000 Pledges Receivable 240.000 x 0.200 7. 16–10 Adjusting entry for Wabash Hospital General Fund.000 x 0.25) 4. June 30. 30. June 30. Inc.000 – $275.300 6. June 30.000 35.500 2.35) Interest and Dividends Revenue To record 35% share of earnings of investment pool for the year.000 68. Ex.000 50.000 $ 100 900 200 50 600 3. 2006 (amounts in thousands) Assets Cash and cash equivalents Accounts receivable (net) Inventory of supplies Short-term prepayments Cash and investments restricted to acquisition of plant assets Plant assets (net) Total assets Liabilities & Net Assets Liabilities: Notes payable Accounts payable and accrued liabilities Advances from third-party payors Deferred revenues Housing and mortgage bonds payable Total liabilities Net Assets (unrestricted): Fund balance designated for plant assets Undesignated fund balance Total net assets Total liabilities and net assets 10. Ex. By definition.000 = 40%) of realized and unrealized gains and earnings of investment pool for the year. July l.. a restricted fund is appropriate only for recording contributions restricted for specific expenditures by the donors. Inc. regardless of source. 2006 189 Modern Advanced Accounting. 50. Sept. 1 Grants Expense Cash To record grants awarded to nine students of ballet.000 Ex.000 45.000 45.100 $4. 16–14 NO-PROF HOSPITAL Statement of Financial Position June 30.300 $2. 2006: Grants Expense Cash To record payment of first installment of revocable three-year grant to Martin Grey.000 10. must be recorded in the Unrestricted Fund of Roakdale Association.900 $4. All unrestricted revenues. 16–13 Journal entry for Technology Specialists. 10/e . 16–12 Journal entries for Artistry Unlimited: 2006 July 1 Cash Contribution Revenue To record gift restricted to scholarships for students of ballet. If the board of directors of Roakdale Association desires to earmark a portion of Unrestricted Fund assets for some The McGraw-Hill Companies.950 CASES Case 16–1 The action by the board of directors of Roakdale Association is unsupportable.950 $ 300 550 200 100 900 $2.To record 40% share ($144.050 $ 600 2. it might be interpreted as a deliberate attempt to mislead users of the organization's financial statements.000 ÷ $360. as a voluntary health and welfare organization. and the principal of a quasiendowment fund may be expended at any time as authorized by the board of trustees. (3) Separate accounting records should be established for each individual endowment fund. The method used by Science Unlimited to present unsold products in its balance sheet is incorrect. "Accounting for Contributions Received and Contributions Made. (2) The principal of a permanent endowment never may be expended. Section ET 203.. Included in those principles is FASB Statement No. the principal of a term endowment may be expended after the passage of a period of time or the occurrence of an event specified by the donor. The chief accountant of Vol-Wel cannot ethically comply with the president's instruction to recognize as contributions revenue the $60. both revenues in the year of the donation and depreciation expense in subsequent years are understated. 116. According to FASB Statement No. is also required to Solutions Manual. Arbitrary valuation methods are unacceptable under generally accepted accounting principles.000 annual salary to program expenses and fund-raising expenses from management and general expenses may be complied with if the chief accountant can obtain evidence supporting the president's participation in programs and fund raising. The president's request to transfer a substantial part of his $100." paragraph 9 of which limits the recognition of contributions of services to services that create or enhance nonfinancial assets or require specialized skills. the principal of a term endowment is expendable when specified by the donor. the directors may designate a portion of the Undesignated Fund Balance ledger account of the Unrestricted Fund. The "base stock" concept of inventory is not in accordance with generally accepted accounting principles. storage costs should be recognized as expenses when incurred. However. 116. assuming that no restrictions were placed on the revenues by the donor of the endowment. However. the appropriate method of valuing inventories for which selling prices are less than production costs is net realizable value. should be displayed with the current asset inventory. which in essence requires members to comply with generally accepted accounting principles. Second. Fund-raising activities require no such specialized skills. Chapter 16 The McGraw-Hill Companies. all unsold products expected to be sold during the forthcoming operating cycle or one year.Case 16–2 Case 16–3 Case 16–4 Case 16–5 Case 16–6 purpose.000 estimated value of services rendered by fundraising volunteers. First. Following are answers to the questions of Toledo Day Care Center's board of trustees: (l) Generally. not at a nominal cost. it must be maintained by the nonprofit organization in perpetuity. The method used by Station KKLL to value the radio station antenna tower is not in accordance with generally accepted accounting principles for nonprofit organizations. vol. 2. A source of evidence might be the president's appointments calendar or expense reimbursement requests. 2006 190 . as indicated in (1). such as those of accountants. For Science Unlimited. whichever is longer.05 of AICPA Professional Standards. 9). It is not proper to account for endowment funds in a single restricted fund of a voluntary health and welfare organization. contributed services are to be recognized only if they create or enhance nonfinancial assets or they require special skills that would be purchased if not contributed by individuals possessing those skills. distribution and handling costs of unsold products constitute disposal costs. for either nonprofit organizations or business enterprises. Inc. "Accounting for Contributions Received and Contributions Made" (par. the chief accountant should point out to the president that Vol-Wel. Contributed plant assets received by a nonprofit organization should be valued at current fair value. Otherwise. only the revenues of an endowment fund are expendable for current operations. The principal of a quasi-endowment fundone that is established by the board of trustees rather than by a donormay be expended on authorization by the trustees. The proposal of the accountant for Nonprofit Religious Organization is not in accordance with generally accepted accounting principles for nonprofit organizations. states that AICPA members who sign communications such as a transmittal letter accompanying financial statements are subject to Rule 203 of the AICPA Code of Professional Conduct. defined as estimated selling price less estimated costs of completion and disposal. However. in accordance with paragraph 26 of FASB Statement No.. thereof.report expenses by their natural classification." (See also paragraph l59. Note F. 2006 191 Modern Advanced Accounting. "Financial Statements of Not-for-Profit Organizations. 10/e . 117. Inc.) The McGraw-Hill Companies. . Inc.30 Minutes. 2006 (amounts in thousands) Revenues: Patient service revenue (net) Other operating revenue Contributions Investment revenue $ 1 4 1 3 2 Total revenues Expenses: Nursing services Other professional services General services Fiscal services Administrative services Depreciation Doubtful accounts Total expenses Increase in unrestricted net assets Solutions Manual. Chapter 16 2 8 8 8 0 0 0 0 $ 2 2 6 0 $ 5 2 3 1 2 3 6 6 6 8 8 4 8 0 0 0 0 0 0 0 $ 2 0 6 0 2 0 0 The McGraw-Hill Companies. 2006 192 . 16–1 Seaside Hospital Statement of Activities For Year Ended June 30. Easy Seaside Hospital Pr. 10/e . Inc. The McGraw-Hill Companies.. 2006 (3) Cash 1 1 0 0 0 0 Investments in Securities Payable to Unrestricted Fund To record sale of investments at a gain. (2) Cash 5 0 0 0 0 5 0 0 0 0 2 0 0 0 0 0 Contributions Revenue To record receipt of unrestricted gift. the use of which is unrestricted. (4) Buildings 5 0 0 0 0 5 0 0 0 0 2 0 0 0 0 0 0 Cash Mortgage Note Payable To record construction of new building financed in part by 5% mortgage note payable. (3) Receivable from Quasi-Endowment Fund Investment Income To record investment gain receivable from QuasiEndowment Fund. 2006 (1) Undesignated Fund Balance Cash To record acquisition of computers to be carried in Plant Fund. 16–2 Holley School Quasi-Endowment Fund Journal Entry For Year Ended June 30. 1 0 0 0 0 0 1 0 0 0 0 Holley School Plant Fund Journal Entries For Year Ended June 30. 2006 (1) Equipment Fund Balance To record acquisition of computers by Unrestricted Fund. 2 5 0 0 0 0 1 7 5 0 0 0 0 Holley School Unrestricted Fund Journal Entries For Year Ended June 30. Medium Holley School Pr. 2006 193 2 0 0 0 0 0 1 0 0 0 0 1 0 0 0 0 Modern Advanced Accounting.30 Minutes. 000 Other assets Total assets $ 7 0 0 0 2 1 7 0 0 0 2 5 0 0 0 6 1 0 0 0 $ 3 1 0 1 2 0 3 3 2 8 0 0 0 0 0 0 0 0 0 0 0 0 $ 4 9 1 0 0 0 Liabilities & Net Assets Current liabilities: Accounts payable and accrued liabilities Deferred membership dues $ Total current liabilities Net assets (unrestricted) $ 1 7 9 0 0 0 3 1 2 0 0 0 Total liabilities & net assets Solutions Manual. Inc. end of year $ 3 1 2 0 0 0 Nonprofit Trade Association Statement of Financial Position June 30. 16–3 Nonprofit Trade Association Statement of Activities For Year Ended June 30. less accumulated depreciation $22. 2006 Assets Current assets: Cash Short-term investments in securities Accounts receivable. Medium Nonprofit Trade Association Pr. Chapter 16 4 8 0 0 0 1 3 1 0 0 0 $ 4 9 1 0 0 0 The McGraw-Hill Companies. beginning of year $ 6 8 2 0 0 0 2 7 0 0 0 2 8 5 0 0 0 Net assets.000 Publications inventory Total current assets Long-term investments in securities Plant assets. less allowance for doubtful accounts. 2006 Revenues and gains Membership dues Conferences and meetings Publication and advertising sales Special assessments Investment revenue and net gains $ 1 8 4 0 3 2 1 0 1 4 3 0 5 0 0 1 1 0 Total revenues and gains Expenses: Member services Conferences and meetings Technical services Communications General administration Membership development 0 0 0 0 0 0 0 0 0 0 $ 7 0 9 0 0 0 $ 5 6 1 6 6 2 1 8 6 1 1 5 4 2 7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total expenses Increase in unrestricted net assets Net assets.. 2006 194 .30 Minutes. $3. 22) = $53. 0 3 9 .000 + ($15.000 (5) $100.000 x 0.000 x 0.50 Minutes. 0 0 Suburban Welfare Services Computation of Revised Equity Percentages for Investment Pool January 2.39) = $105.. 0 0 Computations: (1) $50.300 (2) $300. 5 3 2 .000 The McGraw-Hill Companies.33 = $99. % 2 2 .22 = $66. 16–4 Suburban Welfare Services Computation of Original Equity Percentages for Investment Pool July 1.000 x 0. 6 3 0 0 7 1 0 0 .000 x 0. 0 0 0 0 0 1 0 0 .000 x 0. % 1 8 .000 x 0. Inc.000 (3) $80. 2006 195 Modern Advanced Accounting. 2006 Unrestricted Fund Plant Fund Arnold Life Income Fund Edwards Endowment Fund Totals $ 5 8 1 0 7 Cost 3 3 4 9 5 8 0 0 0 5 5 0 0 (1) 0 (3) 0 (5) 0 $ 3 1 4 1 0 0 Current fair value $ 6 6 0 0 9 9 0 0 1 1 7 0 0 7 8 0 0 0 (2) 0 (4) 0 (6) 0 $ 3 6 0 0 0 0 Revised equity.000 + ($15. 3 2 7 . 0 6 . 0 3 3 . Medium Suburban Welfare Services a.000 + ($15.950 (4) $300.33) = $84. 10/e . 2005 Unrestricted Fund Restricted Fund Plant Fund Arnold Life Income Fund $ Totals 5 2 8 1 0 Cost 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 $ 2 5 0 0 0 0 (2) Current fair value $ 5 9 4 0 1 6 2 0 8 9 1 0 1 0 5 3 0 0 0 0 0 $ 2 7 0 0 0 0 Original equity.850 (6) $300. 5 2 1 . (1) Pr.39 = $117. 2006 196 . 31.8167) To record allocation of investments and payment of cash to other funds of investment pool.000) x 0.78) 1 1 7 0 0 Cash ($25.000 x 0.) June 30 Investments in Securities Cash Gains on Securities Investments ($40.22) Interest and Dividends Revenue ($25.000) x 0. custody of the Restricted Fund’s investments is returned to it.000) x 0.78) 1 9 5 0 0 To record allocation of investments and payment of cash to other funds of investment pool.2750] Payable to Arnold Life Income Fund [($40. and liabilities to other funds.000 x 0.000 + $60.000 + $60.000 x 0.. and liabilities to other funds.000 x 0. 1 5 0 0 0 2 5 0 0 0 3 3 0 0 5 5 0 0 2 4 0 0 1 3 2 0 0 1 5 6 0 0 31 Payable to Restricted Fund 2 4 0 0 Payable to Plant Fund 1 3 2 0 0 Payable to Arnold Life Income Fund 1 5 6 0 0 Investments in Securities ($15. 4 0 0 0 0 6 0 0 0 0 30 Payable to Plant Fund Payable to Arnold Life Income Fund Payable to Edwards Endowment Fund Investments in Securities ($40.2167] To record realized and unrealized gains and earnings of investment pool for six months ended June 30.000 + $60.000 + $25.06] Payable to Plant Fund [($15.8167) Cash ($60.000 x 0. 2005. 16–4 Suburban Welfare Services Unrestricted Fund Journal Entries 20 05 Dec 31 Investments in Securities Cash Gains on Securities Investments ($15. 20 06 Jan 2 (No entry required for withdrawal of Restricted Fund from investment pool.000) x 0.22) Payable to Restricted Fund [($15. Chapter 16 7 3 3 2 1 0 9 9 8 2 7 5 0 0 3 2 5 0 0 2 1 6 7 0 3 2 6 6 8 4 9 0 0 2 The McGraw-Hill Companies.000 x 0.1833) Payable to Plant Fund [($40.000 + $25. 2006.000) x 0.3250] Payable to Edwards Endowment Fund [($40. Inc.1833) Interest and Dividends Revenue ($60. 2 7 5 0 0 3 2 5 0 0 2 1 6 7 0 Solutions Manual.33] Payable to Arnold Life Income Fund [($15.000 x 0.000 + $25.000 x 0.Suburban Welfare Services (concluded) b. Pr.39] To record realized and unrealized gains and earnings of investment pool for six months ended Dec.000) x 0. 9 8 0 0 (3) Pledges Receivable Contributions Revenue To record pledges received from donors during October. 10/e . Inc. 2 5 0 0 Contractual Adjustments Accounts Receivable To record contractual adjustments allowed to Medicaid for October. 2006 197 Modern Advanced Accounting. 8 0 0 (4) Receivable from Arline E. 8 0 0 0 2 5 0 0 6 0 0 0 8 0 0 0 (2) Salaries Expense Contributions Revenue To record donated services by volunteer nurses for October. less cost of meals served to volunteer nurses at no charge ($200). 8 0 0 0 0 8 0 0 0 0 Accounts Receivable Patient Service Revenues To record amount receivable from Bovard Welfare Organization for charity care. at going salary rates ($10. 5 0 0 8 0 0 5 0 0 (Continued on page 454. 5 0 0 0 Cash 9 8 0 0 5 0 0 0 3 5 0 0 Pledges Receivable To record pledges collected in cash during October. 16–5 Harbor Hospital General Fund Journal Entries October. Pr.. 3 5 0 0 Provision for Doubtful Pledges Allowance for Doubtful Pledges To provide for doubtful pledges for October. Walters Annuity Fund Cash To record payment of Arline E. Medium Harbor Hospital a.) The McGraw-Hill Companies. 6 0 0 0 Doubtful Accounts Expense Allowance for Doubtful Accounts To provide for doubtful accounts for October. Walters annuity for October.50 Minutes. 2006 (1) Accounts Receivable Patient Service Revenues To record gross patient service revenue for month of October at full rates.000). 3 0 0 0 3 0 0 0 3 0 0 0 Harbor Hospital Arline E. 2006 (5) Cash 3 0 0 0 Fund Balance To record receipt of cash from Charles Watson Restricted Fund for new surgical equipment. Inc. 2006 Annuity Payable Payable to General Fund To record liability to General Fund for payment of Arline E. Walters annuity for October. 16–5 Harbor Hospital General Fund Journal Entries (concluded) October. b. 5 0 0 5 0 0 Harbor Hospital Charles Watson Restricted Fund Journal Entry October. Plant Assets Cash To record acquisition of new surgical equipment. 2006 Fund Balance Cash To record payment to General Fund for acquisition of new surgical equipment Solutions Manual. Chapter 16 3 0 0 0 3 0 0 0 The McGraw-Hill Companies. Walters Annuity Fund Journal Entry October. 2006 198 ..Harbor Hospital (concluded) Pr. 000 + $794.000) – ($176. Medium Wigstaff Foundation Pr.. 16–6 Wigstaff Foundation Statement of Cash Flows (indirect method) For Year Ended June 30.50 Minutes.000 + $618. 10/e . Inc. beginning of year Cash.000 Exhibit 1 Cash flows from operating activities: Increase in unrestricted net assets Adjustments to reconcile increase in unrestricted net assets to net cash provide by operating activities: Depreciation expense Increase in accounts receivable (net) Increase in unbilled contract revenue and reimbursable grant costs Increase in short-term prepayments Increase in accounts payable and accrued liabilities Increase in restricted grant advances Net cash provided by operating activities The McGraw-Hill Companies. 2006 Net cash provided by operating activities (Exhibit 1) Cash flows from investing activities: Acquisition of furniture and equipment Acquisition of long-term investments in securities Net cash used in investing activities Cash flows from financing activities: Payment of long-term debt Net cash used in financing activities $ 2 6 6 0 0 0 $ 2 2 0 0 0 6 0 0 0 0 ( 8 2 0 0 0 ) $ 1 6 4 0 0 0 * ( 1 6 4 0 0 0 ) Net increase in cash Cash. 2006 199 $ 1 8 8 0 0 0 1 4 8 0 ( 3 2 0 ( 1 9 6 0 ( 4 0 6 0 0 1 0 2 0 0 0 0 0 0 0 0 0 ) 0 ) 0 ) 0 0 $ 2 6 6 0 0 0 Modern Advanced Accounting. end of year $ 2 0 0 0 0 6 3 0 0 0 0 $ 6 5 0 0 0 0 *($164.000) = $164. . 2006 (1) Cash 2 0 0 0 0 Dues Revenue (2) Cash 2 0 0 0 0 2 8 0 0 0 Snack Bar and Soda Fountain Revenue (3) Cash 2 8 0 0 0 6 0 0 0 Interest Revenue 6 0 0 0 (4) Clubhouse Expense Inventories General and Administrative Expense Accounts Payable 1 7 0 0 0 2 6 0 0 0 1 1 0 0 0 (5) Accounts Payable Cash 5 5 0 0 0 (6) Assessments Receivable Contributions Revenue 1 0 0 0 0 (7) Cash 5 4 0 0 0 5 5 0 0 0 1 0 0 0 0 5 0 0 0 Gifts Revenue (8) Clubhouse Expense Snack Bar and Soda Fountain Expense General and Administrative Expense Accumulated Depreciation of Building Accumulated Depreciation of Furniture and Equipment (9) Snack Bar and Soda Fountain Expense ($5. Inc. 16–7 a. Mid-City Sports Club Journal Entries For Year Ended June 30.000 + $26.50 Minutes.000) Inventories Solutions Manual.000 – $1. Chapter 16 5 0 0 0 9 0 0 0 2 0 0 0 1 0 0 0 4 0 0 0 8 0 0 0 3 0 0 0 0 3 0 0 0 0 The McGraw-Hill Companies. Medium Mid-City Sports Club Pr. 2006 200 . 000 + $5. 16–7 b..000 + $4. end of year $ $ $ $ $ $ 2 0 0 2 8 0 6 0 1 5 0 6 9 0 0 0 0 0 0 0 0 0 0 0 2 3 1 7 ( 1 1 0 0 0 0 0 0 0 0 0 0 0 0 ) 0 0 6 2 2 0 1 2 1 0 0 0 0 0 0 0 Mid-City Sports Club Statement of Financial Position June 30.000 each (no change during the year) Cumulative increase in net assets Total net assets (unrestricted) Total liabilities & net assets The McGraw-Hill Companies. beginning of year Cumulative increase in net assets.000) Investments in securities Assessments receivable Inventories Total current assets Plant assets: Land Building Furniture and equipment Subtotal Less: Accumulated depreciation ($130. 2006 201 $ $ 1 3 0 0 5 8 0 0 1 0 0 0 1 0 0 8 2 0 0 $ 1 1 6 5 $ 2 2 1 8 $ 4 $ 1 2 $ 0 4 4 8 8 0 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 0 0 0 $ 1 0 1 $ 1 1 $ 1 2 0 1 1 2 0 0 0 0 0 0 0 0 0 0 0 0 Modern Advanced Accounting.000 + $30.000 + $5.000 + $8. 2006 Revenues and gains: Dues Snack bar and soda fountain Interest Gifts and contributions ($10. 10/e .000) General and administrative ($11.000 + $54. Inc.000 + $9.000) Total revenues and gains Expenses: Clubhouse ($17.Mid-City Sport Club (concluded) Pr.000 – $55. 2006 Assets Current assets: Cash ($9.000) Net assets: Membership certificates.000 + $6. Mid-City Sports Club Statement of Activities For Year Ended June 30.000 – $55.000) Total expenses (Decrease) in unrestricted net assets Cumulative increase in net assets.000 + $20.000) Snack bar and soda fountain ($2.000 + $28.000) Net plant assets Total assets Liabilities & Net Assets Current liabilities: Accounts payable ($12.000 + $46. 100 at $1.000 + $1. 16–8 State University Journal Entries For Year Ended June 30.000) Accounts Payable 1 9 0 0 ( 1 9 0 0 ) 1 7 7 7 0 0 0 (1 7 1 8 0 0 0 ) ( 5 9 0 0 0 ) (Continued on page 459. 2006 Transaction no.) Solutions Manual.000)] Revenues 1 6 8 6 0 0 0 6 6 0 0 0 1 4 8 0 0 0 (1 9 0 0 0 0 0 ) Cash Deferred Revenues 1 5 8 0 0 0 ( 1 5 8 0 0 0 ) Cash Allowance for Doubtful Accounts Accounts Receivable 3 4 9 0 0 0 1 0 0 0 ( 3 5 0 0 0 0 ) Expenses Allowance for Doubtful Accounts 3 0 0 0 ( 3 0 0 0 ) (4) Cash Revenues 6 0 0 0 ( 6 0 0 0 ) (5) Cash State Appropriation Receivable 7 5 0 0 0 ( 7 5 0 0 0 ) State Appropriation Revenues 5 0 0 0 0 ( 5 0 0 0 0 ) Receivable (6) Cash Revenues (7) Cash Investments in Securities Fund Balance 2 5 0 0 0 ( 2 5 0 0 0 ) 2 6 0 0 0 ( 2 1 0 0 0 ) ( 5 0 0 0 ) Cash Fund Balance (8) Endowment Expenses Cash ($1. 2006 202 . Strong State University Pr.. Inc. Chapter 16 The McGraw-Hill Companies.60 Minutes.686.000 – $59.777.000 – ($1. (1) Ledger accounts Unrestricted Restricted Fund Fund Fund dr (cr) dr (cr) dr (cr) Cash Fund Balance 5 0 0 0 0 ( 5 0 0 0 0 ) Investment in Securities Cash (2) (3) 5 0 0 0 0 ( 5 0 0 0 0 ) 5 0 0 0 0 ( 5 0 0 0 0 ) Cash Deferred Revenue Accounts Receivable [$1.900.000 + $66. 2006 Transaction no. 16–8 State University Journal Entries (concluded) For Year Ended June 30. Inc. 10/e .. (9) Ledger accounts Unrestricted Restricted Fund Fund Fund dr (cr) dr (cr) dr (cr) Expenditures Cash 1 3 0 0 0 ( 1 3 0 0 0 ) Fund Balance Revenues 1 3 0 0 0 ( 1 3 0 0 0 ) (10) Accounts Payable Cash (11) Cash Fund Balance The McGraw-Hill Companies. 2006 203 Endowment 4 5 0 0 0 ( 4 5 0 0 0 ) 7 0 0 0 ( 7 0 0 0 ) Modern Advanced Accounting.State University (concluded) Pr. 2006 Plant General Replacement and Fund Expansion Fund Fund dr (cr) dr (cr) dr (cr) Transaction no.400 – $500) Equipment (6) Endowment Administrative Services Expense Interest Expense General Services Expense Nursing Services Expense Other Professional Services Expense Inventory of Supplies Accrued Liabilities Accounts Payable 2 6 0 0 0 ( 2 6 0 0 0 ) 2 6 0 0 0 ( 2 6 0 0 0 ) 5 0 0 2 1 6 0 0 1 9 0 0 ( 2 4 0 0 0 ) 1 2 9 2 2 5 2 1 6 6 0 5 5 0 5 0 6 (1 1 9 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ) (Continued on page 461. 16–9 Resthaven Hospital Journal Entries For Year Ended December 31.60 Minutes. Strong Resthaven Hospital Pr. Chapter 16 The McGraw-Hill Companies.) Solutions Manual. Ledger accounts (1) Accounts Receivable Patient Service Revenues (2) Doubtful Accounts Expense Contractual Adjustments Allowance for Doubtful Accounts Accounts Receivable 3 1 ( 3 ( 1 (3) Mortgage Bonds Payable Cash 1 8 0 0 0 ( 1 8 0 0 0 ) (4) Cash Unrestricted Gift Revenue Unrestricted Revenue from Endowment Fund 5 6 5 0 0 ( 5 0 0 0 0 ) (5) 1 1 0 1 0 0 0 (1 1 0 1 0 0 0 ) 0 5 0 5 0 0 0 0 0 0 0 0 0 0 0 ) 0 ) ( 6 5 0 0 ) Cash Fund Balance 6 5 0 0 ( 6 5 0 0 ) Fund Balance Cash 6 5 0 0 ( 6 5 0 0 ) Fund Balance Cash Equipment Fund Balance Designated for Plant Assets Cash Accumulated Depreciation of Equipment ($24.. Inc.400) Loss on Disposal of Plant Assets ($2.000 – $2. 2006 204 . (7) Ledger accounts Cash Accounts Receivable Allowance for Doubtful Accounts Accounts Receivable (8) Accounts Payable Cash (9) Nursing Services Expense Inventory of Supplies General Replacement and Fund Expansion Fund Fund dr (cr) dr (cr) dr (cr) 9 8 5 0 0 0 ( 9 8 5 0 0 0 ) 1 1 0 0 0 ( 1 1 0 0 0 ) 8 2 5 0 0 0 ( 8 2 5 0 0 0 ) 3 7 0 0 0 ( 3 7 0 0 0 ) (10) Interest Receivable Fund Balance (11) Depreciation Expense Accumulated Depreciation of Buildings Accumulated Depreciation of Equipment (12) Interest Expense Accrued Liabilities The McGraw-Hill Companies. 2006 205 Endowment 8 0 0 ( 8 0 0 ) 1 1 7 0 0 0 ( 4 4 0 0 0 ) ( 7 3 0 0 0 ) 6 1 0 0 ( 6 1 0 0 ) Modern Advanced Accounting. 2006 Plant Transaction no. Inc.Resthaven Hospital (concluded) Pr. 16–9 Resthaven Hospital Journal Entries (concluded) For Year Ended December 31. 10/e .. 500.60 Minutes. 2006 206 .000 – ($15. Inc..000) Accounts Receivable.000 – $362.000 + $2. Tuition and Fees 1 3 0 0 0 ( 1 3 0 0 0 ) Doubtful Tuition and Fees Expense [$10.000 – $13. Tuition and Fees Tuition and Fees Revenue Deferred Revenues (2) Deferred Revenues Tuition and Fees Revenue 2 5 0 0 0 ( 2 5 0 0 0 ) (3) Allowance for Doubtful Accounts ($360.000 + $15. Ledger accounts 0 3 5 1 0 6 0 3 Fund dr (cr) dr (cr) (1) Cash Accounts Receivable. Chapter 16 The McGraw-Hill Companies. 2006 Unrestricted Transaction no.000) Cash 2 5 2 5 0 0 0 (2 5 2 5 0 0 0 ) (Continued on page 463.) Solutions Manual. Strong Libra College Pr. 16–10 Libra College Journal Entries For Year Ended June 30.000)] Allowance for Doubtful Accounts 3 ( (2 ( Restricted Fund 0 2 0 8 0 0 0 0 0 0 0 0 0 0 ) 0 ) 0 ) 8 0 0 0 ( 8 0 0 0 ) (4) State Appropriation Receivable Government Grants Revenue 6 0 0 0 0 ( 6 0 0 0 0 ) (5) Cash Private Gifts Revenue 8 0 0 0 0 ( 8 0 0 0 0 ) Fund Balance Cash 3 0 0 0 0 ( 3 0 0 0 0 ) (6) (7) Cash Fund Balance 1 8 0 0 0 ( 1 8 0 0 0 ) Cash Investment in Securities Fund Balance 3 1 0 0 0 ( 2 5 0 0 0 ) ( 6 0 0 0 ) Investments in Securities Cash 4 0 0 0 0 ( 4 0 0 0 0 ) Educational and General Expenses Accounts Payable 2 5 0 0 0 0 0 (2 5 0 0 0 0 0 ) Accounts Payable ($100.000 – $75. 10/e .000 x ¼) Short-Term Prepayments 1 0 0 0 0 ( 1 0 0 0 0 ) The McGraw-Hill Companies.. Inc. 2006 207 Restricted Fund 5 0 0 0 ( 5 0 0 0 ) Modern Advanced Accounting. Ledger accounts Fund dr (cr) dr (cr) (8) Accounts Payable Cash (9) Payable to Other Funds Cash 4 0 0 0 0 ( 4 0 0 0 0 ) (10) Educational and General Expenses ($40. 16–10 Libra College Journal Entries (concluded) For Year Ended June 30. 2006 Unrestricted Transaction no.Libra College (concluded) Pr. beginning of year ($12.000 + $1.000) Bequest and interest receivable ($5.000) Fund raising 0 5 0 0 0 0 0 0 0 0 0 0 0 0 0 0 $ 3 8 5 0 0 0 $ 2 7 0 0 0 0 4 7 0 0 0 8 0 0 0 Total expenses Increase in unrestricted net assets Changes in temporarily restricted net assets: Contributions Management and general expenses Fund-raising expenses $ 3 2 5 0 0 0 $ 6 0 0 0 0 $ 1 5 0 0 0 ( 4 0 0 0 ) ( 1 0 0 0 ) Increase in temporarily restricted net assets Increase in net assets Net assets.000 + $9. end of year $ 1 1 1 0 0 0 4 1 0 0 0 Disadvantaged Children Association Statement of Financial Position June 30. 2006 Assets Cash ($40.000 + $2..60 Minutes. Inc.000 + $60.000) Investments in securities.000) Temporarily restricted ($3.000 + $10.000) Total net assets Total liabilities & net assets Solutions Manual.000 + $26.000) Pledges receivable (net) ($12.000 – $3.000) $ $ 1 0 0 0 0 7 0 0 0 0 Net assets.000 + $3.000) Deferred revenues Total liabilities Net assets: Unrestricted ($38. Chapter 16 $ 5 1 0 0 0 2 0 0 0 $ 5 3 0 0 0 $ 9 8 0 0 0 1 3 0 0 0 $ 1 1 1 0 0 0 $ 1 6 4 0 0 0 The McGraw-Hill Companies. 2006 208 . Strong Disadvantaged Children Association Pr. at fair value Total assets $ 4 9 6 9 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 $ 1 6 4 0 0 0 Liabilities & Net Assets Liabilities: Accounts payable and accrued liabilities ($50.000 + $1. 2006 Changes in unrestricted net assets: Revenue and gains: Contributions Membership dues Program service fees Investment revenue and gains $ 3 2 2 3 1 Total unrestricted revenues and gains Expenses: Program Management and general ($45. 16–11 Disadvantaged Children Association Statement of Activities For Year Ended June 30.