Not-for-Profit Optional Problem 1.Review each of the following items that were noted by the CFO after the unadjusted trial balance was prepared and make adjusting and reclassifying entries as necessary. Do not assume that all items listed require adjustments or reclassifications.

a.$2,000 was charged to occupancy and utility expense that represented a rental deposit for a three-year operating lease of a new copier.

b.Depreciation expense recorded for the year was incorrect. The correct amount of depreciation should have been $50,000.

c.Ending inventory included $3,500 for brochures related to the planned giving campaign scheduled to begin September 1, 2015.

d.Service Fees - Daycare included $5,500 related to childcare services for the week beginning July 1, 2015.

e.Printing and publishing expense included $1,000 for check stock (i.e. special watermarked paper for printing operating and payroll checks) that was received June 29, 2015. A review of all charges to this account indicated 55% of the charges related to the Fundraising function and the remaining 45% were related to the Administrative function.

f.A review of all charges to Contract Computer Services indicated 50% of the charges related to the Centers child care programs, 15% related to maintaining the Centers donor data base, and the remaining 35% related to the Administrative function.

g.Unrestricted contributions revenue included $25,000 that, based on a letter dated March 1, 2015 from the donor, is to be used for a new after school reading program. The after school care program director plans to begin this new program with the start of the new school year in August of 2015.

h.The fair value of unrestricted investments increased $18,000.

2.Two weeks after fiscal year end, a major donor with an outstanding unrestricted pledge of $4,000 filed for Chapter 7 bankruptcy. Remember that all bad debt write offs for uncollectible pledges are considered fundraising expenses.

3.Occupancy and related costs are charged to functions based on the relative square footage used for each program/function. Building space is utilized as follows:

After school care services 1,750 square feet

Preschool 2,250 square feet

Preschool daycare 2,000 square feet

Parent training classes 1,500 square feet

Administration 1,750 square feet

Executive 750 square feet

4.All program related expenses, unless otherwise noted, are incurred by each program in proportion to the related program revenues.

5.Following is a list of salaries and fringe benefits incurred by programs and functions. The CFO studied time records and talked to employees to determine how employees spent their time.

After school care services 10 staff 100% program $ 225,000

Preschool 4 staff 100% program 180,000

Preschool daycare 10 staff 100% program 190,000

Parent training classes 1 staff 100% program 5,000

Administration 4 staff 2% fundraising 160,000

Executive 2 staff 5% fundraising 220,000