Preparation of not-for-profit journal entries and financial statements Music and Math Camp, Inc. is a not-for-profit organization
Question:
Preparation of not-for-profit journal entries and financial statements
Music and Math Camp, Inc. is a not-for-profit organization dedicated to the development of music skills in kids through weekend and summer camp experiences. Research shows that learning to read music and play an instrument helps the brain work with the body leading to stronger memory and math skills.
The organization reported the following post-closing trial balance at the end of last year:
Beginning Balances:DRCRCash$351,000Investments4,680,000Contributions receivable1,014,000Property, plant and equipment, net2,340,000Payables$780,000Long-term liabilities1,560,000Net assetswithout donor restrictions3,120,000Net assetswith donor restrictions2,925,000$8,385,000$8,385,000
The organization reported a cash investment return of 5% during the subsequent year, and the investments are allocated as follows:
InvestmentWithout Donor Restrictions =20%InvestmentWith Donor Restrictions =80%
In addition to the recognition of investment returns, the organization reported the following revenues and expenses, all on account:
Supportcontributions (without donor restrictions)$5,460,000Supportcontributions (with donor restrictions)633,750Expensesprogram5,070,000Expensessupport721,500
Of the total expenses, $390,000 relate to uses that are paid from net assets with donor restrictions in accordance with the stipulations of the donors and are, therefore, released from restriction.
During the year, the organization collected $5,850,000 of receivables and paid $5,655,000 of accounts payable. In addition, it purchased long-term assets for cash in the amount of $253,500 and recognized depreciation expense of $175,500 (of which 90% relates to program expenses and 10% relates to support expenses). The organization also purchased additional investments with excess cash in the amount of $234,000 and repaid $224,250 principal amount of long-term debt.
a. Prepare journal entries for the organization's financial activities during the year.
General JournalDescriptionDebitCreditCashAnswer
Answer
Answer
Cash
Contributions receivable
Depreciation expense
Expenses-program
Investments
Long-term debt
Net assets released from restrictionswith donor restrictions
Net assets released from restrictionswithout donor restrictions
Payables
Property, plant and equipment, net
Revenuesinvestment (with donor restrictions)
Answer
Answer
Supportcontributions (without donor restrictions)Answer
Answer
Supportcontributions (with donor restrictions)Answer
Answer
Revenuesinvestment (without donor restrictions)Answer
Answer
Answer
Cash
Contributions receivable
Depreciation expense
Expenses-program
Investments
Long-term debt
Net assets released from restrictionswith donor restrictions
Net assets released from restrictionswithout donor restrictions
Payables
Property, plant and equipment, net
Revenuesinvestment (with donor restrictions)
Answer
Answer
To record recognition of support and revenues.Answer
Cash
Contributions receivable
Depreciation expense
Expenses-program
Investments
Long-term debt
Net assets released from restrictionswith donor restrictions
Net assets released from restrictionswithout donor restrictions
Payables
Property, plant and equipment, net
Revenuesinvestment (with donor restrictions)
Answer
Answer
Answer
Cash
Contributions receivable
Depreciation expense
Expenses-program
Investments
Long-term debt
Net assets released from restrictionswith donor restrictions
Net assets released from restrictionswithout donor restrictions
Payables
Property, plant and equipment, net
Revenuesinvestment (with donor restrictions)
Answer
Answer
To release net assets from restrictions.Answer
Cash
Contributions receivable
Depreciation expense
Expenses-program
Investments
Long-term debt
Net assets released from restrictionswith donor restrictions
Net assets released from restrictionswithout donor restrictions
Payables
Property, plant and equipment, net
Revenuesinvestment (with donor restrictions)
Answer
Answer
Expenses-supportAnswer
Answer
Answer
Cash
Contributions receivable
Depreciation expense
Expenses-program
Investments
Long-term debt
Net assets released from restrictionswith donor restrictions
Net assets released from restrictionswithout donor restrictions
Payables
Property, plant and equipment, net
Revenuesinvestment (with donor restrictions)
Answer
Answer
To record recognition of expenses.Answer
Cash
Contributions receivable
Depreciation expense
Expenses-program
Investments
Long-term debt
Net assets released from restrictionswith donor restrictions
Net assets released from restrictionswithout donor restrictions
Payables
Property, plant and equipment, net
Revenuesinvestment (with donor restrictions)
Answer
Answer
Answer
Cash
Contributions receivable
Depreciation expense
Expenses-program
Investments
Long-term debt
Net assets released from restrictionswith donor restrictions
Net assets released from restrictionswithout donor restrictions
Payables
Property, plant and equipment, net
Revenuesinvestment (with donor restrictions)
Answer
Answer
To record collection of receivables.Answer
Cash
Contributions receivable
Depreciation expense
Expenses-program
Investments
Long-term debt
Net assets released from restrictionswith donor restrictions
Net assets released from restrictionswithout donor restrictions
Payables
Property, plant and equipment, net
Revenuesinvestment (with donor restrictions)
Answer
Answer
Answer
Cash
Contributions receivable
Depreciation expense
Expenses-program
Investments
Long-term debt
Net assets released from restrictionswith donor restrictions
Net assets released from restrictionswithout donor restrictions
Payables
Property, plant and equipment, net
Revenuesinvestment (with donor restrictions)
Answer
Answer
To record payment on account payables.Answer
Cash
Contributions receivable
Depreciation expense
Expenses-program
Investments
Long-term debt
Net assets released from restrictionswith donor restrictions
Net assets released from restrictionswithout donor restrictions
Payables
Property, plant and equipment, net
Revenuesinvestment (with donor restrictions)
Answer
Answer
Expenses-programAnswer
Answer
Expenses-supportAnswer
Answer
Answer
Cash
Contributions receivable
Depreciation expense
Expenses-program
Investments
Long-term debt
Net assets released from restrictionswith donor restrictions
Net assets released from restrictionswithout donor restrictions
Payables
Property, plant and equipment, net
Revenuesinvestment (with donor restrictions)
Answer
Answer
To record purchase of long-term assets and recognize depreciation.Answer
Cash
Contributions receivable
Depreciation expense
Expenses-program
Investments
Long-term debt
Net assets released from restrictionswith donor restrictions
Net assets released from restrictionswithout donor restrictions
Payables
Property, plant and equipment, net
Revenuesinvestment (with donor restrictions)
Answer
Answer
Answer
Cash
Contributions receivable
Depreciation expense
Expenses-program
Investments
Long-term debt
Net assets released from restrictionswith donor restrictions
Net assets released from restrictionswithout donor restrictions
Payables
Property, plant and equipment, net
Revenuesinvestment (with donor restrictions)
Answer
Answer
To record purchase of investments.Answer
Cash
Contributions receivable
Depreciation expense
Expenses-program
Investments
Long-term debt
Net assets released from restrictionswith donor restrictions
Net assets released from restrictionswithout donor restrictions
Payables
Property, plant and equipment, net
Revenuesinvestment (with donor restrictions)
Answer
Answer
Answer
Cash
Contributions receivable
Depreciation expense
Expenses-program
Investments
Long-term debt
Net assets released from restrictionswith donor restrictions
Net assets released from restrictionswithout donor restrictions
Payables
Property, plant and equipment, net
Revenuesinvestment (with donor restrictions)
Answer
Answer
To record payment on debt.
b. Prepare the year-end statement of activities and statement of financial position.
Note:Use a negative sign with your answer to indicate a decrease in net assets or release of net assets from restriction.
Statement of ActivitiesWithout
Donor RestrictionsWith
Donor RestrictionsTotalSupportcontributionsAnswer
Answer
Answer
RevenuesinvestmentAnswer
Answer
Answer
Net assets released from restrictionsAnswer
Answer
Answer
Total support and revenueAnswer
Answer
Answer
ExpensesprogramAnswer
Answer
Answer
ExpensessupportAnswer
Answer
Answer
Total expensesAnswer
Answer
Answer
Change in net assetsAnswer
Answer
Answer
Net assets beginning of yearAnswer
Answer
Answer
Net assets end of yearAnswer
Answer
Answer
Statement of Financial PositionCashAnswer
InvestmentsAnswer
Contributions receivableAnswer
Total current assetsAnswer
Property plant and equipment netAnswer
Total assetsAnswer
PayablesAnswer
Total current liabilitiesAnswer
Long-term LiabilitiesAnswer
Total liabilitiesAnswer
Net assetswithout donor restrictionsAnswer
Net assetswith donor restrictionsAnswer
Total net assetsAnswer
Total liabilities and net assetsAnswer
Expert Answer:
