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:	DR	CR
Cash	$234,000
Investments	3,120,000
Contributions receivable	676,000
Property, plant and equipment, net	1,560,000
Payables		$520,000
Long-term liabilities		1,040,000
Net assetswithout donor restrictions		2,080,000
Net assetswith donor restrictions		1,950,000
	$5,590,000	$5,590,000

The organization reported a cash investment return of 4% 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)	$3,640,000
Supportcontributions (with donor restrictions)	422,500
Expensesprogram	3,380,000
Expensessupport	481,000

Of the total expenses, $260,000 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 $3,900,000 of receivables and paid $3,770,000 of accounts payable. In addition, it purchased long-term assets for cash in the amount of $169,000 and recognized depreciation expense of $117,000 (of which 88% relates to program expenses and 12% relates to support expenses). The organization also purchased additional investments with excess cash in the amount of $156,000 and repaid $149,500 principal amount of long-term debt.

a. Prepare journal entries for the organizations financial activities during the year.

General Journal
Description	Debit	Credit
Cash	Answer	Answer
Answer	Answer	Answer
Supportcontributions (without donor restrictions)	Answer	Answer
Supportcontributions (with donor restrictions)	Answer	Answer
Revenuesinvestment (without donor restrictions)	Answer	Answer
Answer	Answer	Answer
To record recognition of support and revenues.
Answer	Answer	Answer
Answer	Answer	Answer
To release net assets from restrictions.
Answer	Answer	Answer
Expenses-support	Answer	Answer
Answer	Answer	Answer
To record recognition of expenses.
Answer	Answer	Answer
Answer	Answer	Answer
To record collection of receivables.
Answer	Answer	Answer
Answer	Answer	Answer
To record payment on account payables.
Answer	Answer	Answer
Expenses-program	Answer	Answer
Expenses-support	Answer	Answer
Answer	Answer	Answer
To record purchase of long-term assets and recognize depreciation.
Answer	Answer	Answer
Answer	Answer	Answer
To record purchase of investments.
Answer	Answer	Answer
Answer	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 Activities
	Without Donor Restrictions	With Donor Restrictions	Total
Supportcontributions	Answer	Answer	Answer
Revenuesinvestment	Answer	Answer	Answer
Net assets released from restrictions	Answer	Answer	Answer
Total support and revenue	Answer	Answer	Answer
Expensesprogram	Answer	Answer	Answer
Expensessupport	Answer	Answer	Answer
Total expenses	Answer	Answer	Answer
Change in net assets	Answer	Answer	Answer
Net assets beginning of year	Answer	Answer	Answer
Net assets end of year	Answer	Answer	Answer

Statement of Financial Position
Cash	Answer
Investments	Answer
Contributions receivable	Answer
Total current assets	Answer
Property plant and equipment net	Answer
Total assets	Answer
Payables	Answer
Total current liabilities	Answer
Long-term Liabilities	Answer
Total liabilities	Answer
Net assetswithout donor restrictions	Answer
Net assetswith donor restrictions	Answer
Total net assets	Answer
Total liabilities and net assets	Answer