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The Association of Women in Government established an Educational Foundation to raise money to support scholarship and other education initiatives. The Educational Foundation is a
The Association of Women in Government established an Educational Foundation to raise money to support scholarship and other education initiatives. 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 endowment interest and investment gains) are derived from investment in AAA- rated corporate bonds and are restricted for the payment of scholarships At the end of 2016, the organization had the following account balances: Debits Credits Cash $ 22.900 Interest receivable 700 Investments in bonds 100,000 Pledges receivable 27,232 Supplies inventory 400 Scholarships payable $ 5.000 Permanently restricted net assets 127,232 Net assets-temporarily restricted: for scholarships 2,600 Unrestricted net assets 16,400 Total $151,232 $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 photocopying expenses (paid in cash) totaled $2,050 for the year. The Foundation purchased supplies of $1,900 on account and made payments of $1,700. Unused supplies at year-end totaled $420. 2. Unrestricted donations received totaled $9,600. 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 scheduled 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.) 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
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