Clear Wells International (CWT) is a not-for-profit organization formed on January 1, 2019. CWI's mission is to provide clean well water in developing countries. They initially thought that they would use the restricted fund method to account for restricted contributions and drafted the 2019 financial statements on that basis. The board is now considering a single column presentation using the deferral contribution method of accounting for restricted contributions. You, as a member of CWI's board, have volunteered to help with the board's decision by redrafting the statements. CWI's financial statements using the restricted fund method are found on the following page. REQUIRED: a. Prepare a revised statement of operations and a statement of financial position using the deferral contribution method. (12 marks) Contrast the approaches of the deferral contribution method and the restricted fund method to communicate information to the stakeholders about restricted contributions and their utilization. (4 marks) c. Clear Wells held its first fundraising campaign during January 2020. The campaign was deemed to be a success as it resulted in pledges totaling $50,000. These funds are to be used at management's discretion and are to be collected by March 31, 2020. The board is hopeful that 90% of the pledges will be collected. i. Explain whether the pledges can be set up as an asset on the statement of financial position. (3 marks) Assuming that the pledges can be set up, prepare the journal entry that would be recorded. (3 marks) Clear Wells International Statement of Operations and Changes in Fund Balances For the year ended December 31, 2019 General Endowment Special Capital Asset Fund Fund Project Fund Fund Revenues Government Grants (unrestricted) $ 140,000 $ Restricted contribution for endowment 250,000 Interest on endowment 10,000 Restricted contribution for special project 65,000 Restricted contribution for office equipment 15,000 $ 150,000 $ 250,000 $ 65,000 $ 15,000 Expenses General operating expenses Special Project expenses Depreciation expense 92,000 50,000 92,000 58,000 $ 3,000 3,000 12,000 $ 50.000 15,000 $ 250,000 $ Excess of revenues over expenses Fund balances at beginning of year Fund balances at end of year $ 58,000 $ 250,000 $ 15,000 $ 12,000 Clear Wells International Statement of Financial Position At December 31, 2019 General Endowment Special Capital Asset Fund Fund Project Fund Fund Assets Cash Prepaid expenses Investments Office equipment 38,000 $ 24,000 15,000 $ 250,000 15,000 Special Project expenses Depreciation expense 50,000 92,000 58,000 $ 3,000 3,000 12,000 $ 50,000 15,000 $ 250,000 $ Excess of revenues over expenses Fund balances at beginning of year Fund balances at end of year 58,000 $ 250,000 $ 15,000 $ 12,000 Clear Wells International Statement of Financial Position At December 31, 2019 General Endowment Fund Fund Special Project Fund Capital Asset Fund S 38,000 $ 24,000 $ 15,000 $ Assets Cash Prepaid expenses Investments Office equipment Accum Depreciation Total Assets 250.000 15,000 (3,000) 12,000 62,000 $ 15,000 $ Liabilities Accounts Payable $ 4,000 $ 250,000 Fund Balances Endowment find Special project fund Capital asset fund Unrestricted Total liabilities and fund balances 15,000 12,000 $ 58,000 62,000 $ 250,000 $ 15,000 $ 12,000 Clear Wells International (CWT) is a not-for-profit organization formed on January 1, 2019. CWI's mission is to provide clean well water in developing countries. They initially thought that they would use the restricted fund method to account for restricted contributions and drafted the 2019 financial statements on that basis. The board is now considering a single column presentation using the deferral contribution method of accounting for restricted contributions. You, as a member of CWI's board, have volunteered to help with the board's decision by redrafting the statements. CWI's financial statements using the restricted fund method are found on the following page. REQUIRED: a. Prepare a revised statement of operations and a statement of financial position using the deferral contribution method. (12 marks) Contrast the approaches of the deferral contribution method and the restricted fund method to communicate information to the stakeholders about restricted contributions and their utilization. (4 marks) c. Clear Wells held its first fundraising campaign during January 2020. The campaign was deemed to be a success as it resulted in pledges totaling $50,000. These funds are to be used at management's discretion and are to be collected by March 31, 2020. The board is hopeful that 90% of the pledges will be collected. i. Explain whether the pledges can be set up as an asset on the statement of financial position. (3 marks) Assuming that the pledges can be set up, prepare the journal entry that would be recorded. (3 marks) Clear Wells International Statement of Operations and Changes in Fund Balances For the year ended December 31, 2019 General Endowment Special Capital Asset Fund Fund Project Fund Fund Revenues Government Grants (unrestricted) $ 140,000 $ Restricted contribution for endowment 250,000 Interest on endowment 10,000 Restricted contribution for special project 65,000 Restricted contribution for office equipment 15,000 $ 150,000 $ 250,000 $ 65,000 $ 15,000 Expenses General operating expenses Special Project expenses Depreciation expense 92,000 50,000 92,000 58,000 $ 3,000 3,000 12,000 $ 50.000 15,000 $ 250,000 $ Excess of revenues over expenses Fund balances at beginning of year Fund balances at end of year $ 58,000 $ 250,000 $ 15,000 $ 12,000 Clear Wells International Statement of Financial Position At December 31, 2019 General Endowment Special Capital Asset Fund Fund Project Fund Fund Assets Cash Prepaid expenses Investments Office equipment 38,000 $ 24,000 15,000 $ 250,000 15,000 Special Project expenses Depreciation expense 50,000 92,000 58,000 $ 3,000 3,000 12,000 $ 50,000 15,000 $ 250,000 $ Excess of revenues over expenses Fund balances at beginning of year Fund balances at end of year 58,000 $ 250,000 $ 15,000 $ 12,000 Clear Wells International Statement of Financial Position At December 31, 2019 General Endowment Fund Fund Special Project Fund Capital Asset Fund S 38,000 $ 24,000 $ 15,000 $ Assets Cash Prepaid expenses Investments Office equipment Accum Depreciation Total Assets 250.000 15,000 (3,000) 12,000 62,000 $ 15,000 $ Liabilities Accounts Payable $ 4,000 $ 250,000 Fund Balances Endowment find Special project fund Capital asset fund Unrestricted Total liabilities and fund balances 15,000 12,000 $ 58,000 62,000 $ 250,000 $ 15,000 $ 12,000