Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

For a number of years, a private not-for-profit entity has been preparing financial statements that do not necessarily conform to U.S. generally accepted accounting principles.

image text in transcribed For a number of years, a private not-for-profit entity has been preparing financial statements that do not necessarily conform to U.S. generally accepted accounting principles. At the end of the most recent year (Year 2), those financial statements show total assets of $900,000, total liabilities of $100,000, net assets without donor restriction of $400,000, and net assets with donor restrictions of $400,000. This last category is composed of $300,000 in net assets with purpose restrictions and $100,000 in net assets that must be permanently held. At the end of Year 1, financial statements show total assets of $700,000, total liabilities of $60,000, net assets without donor restriction of $340,000, and net assets with donor restrictions of $300,000. This last category is composed of $220,000 in net assets with purpose restrictions and $80,000 in net assets that must be permanently held. Total expenses for Year 2 were $500,000 and reported under net assets without donor restrictions. Each part that follows should be viewed as an independent situation. Assume that this entity charges its members $100,000 each year (Year 1 and Year 2). The members get nothing in return for their dues. The entity consistently records the cash collections as an increase in cash and an increase in exchange revenues under net assets without donor restrictions. The board of trustees approved a policy several years ago that 10 percent of the money collected from membership fees be set aside and invested with the money held for emergency purposes. Cash is decreased and "investments held for emergencies" are increased with each purchase. Required: a. What is the appropriate amount of net assets without donor restrictions at the end of Year 1? b. What is the appropriate amount of net assets without donor restrictions at the end of Year 2? c. What is the appropriate amount of net assets with donor restrictions at the end of Year 2

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Energy Finance And Economics Analysis And Valuation Risk Management And The Future Of Energy

Authors: Betty Simkins, Russell Simkins

1st Edition

1118017129, 978-1118017128

More Books

Students also viewed these Finance questions

Question

=+Does it showcase the firm's benefits?

Answered: 1 week ago

Question

=+ Does it list exciting places to go and famous sites to see?

Answered: 1 week ago