provided: T-accounts. f Financial Position, and December 31, 2017. 1014. The Association of Women in Government established an Educational Foundation to raise money to support scholarship and other education ini- tiatives. The Educational Foundation is a private not-for-profit. Members of the Association of Women in Government periodically make donations to the Educational Foundation. With the exception of the gift described below, these are unrestricted. In December 2016, a donor established a permanent endowment with an initial payment of $100,000 and a pledge to provide $10,000 per year for 3 years, beginning in December 2017. At the time, the pledge was recorded at the present value ($27,232), discounted at 5 percent. Earnings of the endow- ment (interest and investment gains) are derived from investment in AAA- rated corporate bonds and are restricted for the payment of scholarships. 316 Chapter 10 At the end of 2016, the organization had the following account balances: Debits Credits $ 22,900 700 100,000 27,232 400 Cash Interest receivable Investments in bonds Pledges receivable Supplies inventory Scholarships payable Permanently restricted net assets Net assets-temporarily restricted: for scholarships Unrestricted net assets $ 5,000 127,232 2,600 16,400 $151,232 Total $151,232 The following took place during 2017: 1. The Educational Foundation has no employees. Administrative costs are limited to supplies, postage, and photocopying. Postage and pho- tocopying expenses (paid in cash) totaled $2,050 for the year. The Foundation purchased supplies of $1,900 on account and made pay- ments of $1,700. Unused supplies at year-end totaled $420. 2. Unrestricted donations received totaled $9,600. 3 Interat budodamounts 3. Interest received on the bonds totaled $7,500, which included amounts receivable at the end of 2016. Accrued interest receivable at December 31, 2017, totaled $600. 4. The fair value of the bonds at year-end was determined to be $102,100. Income, including increases in the value of endowment investments, may be used for scholarships in the year earned. 5. The donor who established the permanent endowment made the sched- uled payment of $10,000 at the end of 2017. (Hint: First record the increase in the present value of the pledge and then record the receipt of the $10,000.) 6. New scholarships were awarded in the amount of $17,000. Payments of scholarships (including those amounts accrued at the end of the previous year) totaled $19,500 during the year. Consistent with FASB standards, scholarships are assumed to be awarded first from resources provided from restricted revenues. (Hint: Add beginning temporarily restricted net assets to endowment earnings to determine the amount to reclassify from temporarily restricted net assets.) IIsing Using the information above and the Excel template provided: a. Prepare journal entries and post entries to the T-accounts. b. Prepare closing entries. c. Prepare a Statement of Activities, Statement of Financial Position, and Statement of Cash Flows for the year ending December 31, 2017
