Journal Entries and Financial Statements

The Southside Counseling Center was established on January 10, 2016, to provide a variety of counseling services to community residents, including marital and family counseling and treatment for alcoholism and drug abuse. The center's initial resources were provided by a private foundation in the form of a $1,250,000 capital grant. Of this sum, the foundation designated $500,000 for building and equipment and $375,000 for the establishment of a special program for counseling parolees.

The following transactions occurred during 2016.

Contributions of $600,000 were received through the local United Way campaign, and an additional $100,000 was received in direct contributions. Of the direct contributions, $10,000 was for the parolees' program and $25,000 was for the building fund; the remaining $65,000, of which $30,000 was in the form of documented pledges expected to be collected within one year, was unrestricted. The pledges are estimated to be 85% collectible. Any bad debt expense is allocated to administrative expense.

Out-of-pocket operating expenses for the year were $700,000. Of the total, $475,000 are program expenses, $175,000 are administrative expenses, and the remainder are fund-raising expenses. $50,000 of the expenses were unpaid at year-end.

The special parolees' program had not yet begun as of December 31, 2016. All resources dedicated to this program were invested in short-term securities. Investment income for the year, which was reinvested, was $15,000. There are no unrealized gains or losses on the securities.

The center obtained a $1,200,000 mortgage to purchase a building, and obtained a $150,000 3-year note to purchase equipment. The center also used the designated capital grant to finance these purchases; the total cost of the building and equipment was $1,850,000.

Interest of $70,000 was accrued and paid on the mortgage and note, all allocated to administrative expense.

Depreciation on the building and equipment is $95,000 all allocated to program expenses.

Required a. Prepare journal entries to record the transactions for 2016.

General Journal
Ref.	Description	Debit	Credit
	Restricted cash	Answer	Answer
	Answer	Answer	Answer
	Contributions-temporarily restricted	Answer	Answer
	Contributions-temporarily restricted	Answer	Answer
	Answer	Answer	Answer
	To record receipt of initial resources provided by private foundation.
1.	Cash	Answer	Answer
	Restricted cash	Answer	Answer
	Pledges receivable	Answer	Answer
	Answer	Answer	Answer
	Allowance for uncollectibles	Answer	Answer
	Contributions-unrestricted	Answer	Answer
	Contributions-temporarily restricted	Answer	Answer
	Answer	Answer	Answer
2.	Answer	Answer	Answer
	Administrative expenses (UR)	Answer	Answer
	Fund-raising expenses (UR)	Answer	Answer
	Accounts payable	Answer	Answer
	Answer	Answer	Answer
3.	Answer	Answer	Answer
	Cash	Answer	Answer
	Answer	Answer	Answer
4.	Answer	Answer	Answer
	Answer	Answer	Answer
	Answer	Answer	Answer
	Note payable	Answer	Answer
	Restricted cash	Answer	Answer
	Answer	Answer	Answer
5.	Answer	Answer	Answer
	Answer	Answer	Answer
6.	Answer	Answer	Answer
	Answer	Answer	Answer

b. Prepare Southside's statement of activities for 2016 and its statement of financial position at December 31, 2016.

Use negative signs with answers that reduce the change in net assets.

Southside Counseling Center Statement of Activities For the Year Ended December 31, 2016
	Unrestricted	Temporarily Restricted
Revenues, gains, and other support:
Contributions-General	$Answer	$Answer
Contributions-Grant	Answer	Answer
Contributions-Parolee program	Answer	Answer
Contributions-Building fund	Answer	Answer
Investment income	Answer	Answer
Net assets released from program restrictions	Answer	Answer
Total revenues, gains and other support	Answer	Answer
Expenses:
Program expenses	Answer	Answer
Administrative expenses	Answer	Answer
Fund-raising expenses	Answer	Answer
Change in net assets	Answer	Answer
Net assets, January 1, 2016	Answer	Answer
Net assets, December 31, 2016	$Answer	$Answer

Southside Counseling Center Statement of Financial Position December 31, 2016
Assets
Cash	$Answer
Pledges receivable, net	Answer
Investments	Answer
Restricted cash	Answer
Building and equipment, net	Answer
Total assets	$Answer
Liabilities and net assets
Liabilities:
Accounts payable	$Answer
Note payable	Answer
Mortgage payable	Answer
	Answer
Net assets:
Unrestricted	Answer
Temporarily restricted	Answer
	Answer
Total liabilities and net assets	$Answer