Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Perch Falls Minor Hockey Association was established in Perch Falls in January, Year 5. Its mandate is to promote recreational hockey in the small

The Perch Falls Minor Hockey Association was established in Perch Falls in January, Year 5. Its mandate is to promote recreational hockey in the small community of Perch Falls. With the support of the provincial government, local business people, and many individuals, the association raised sufficient funds to build an indoor hockey arena, and it also established an endowment fund for paying travel costs to tournaments on an annual basis.

The following schedule summarizes the cash flows for the year ended December 31, Year 5.

PERCH FALLS MINOR HOCKEY ASSOCIATION
($000s)
Operating fund Capital fund Endowment fund
Cash inflows:
Government grant for operating costs $ 45
Government grant for hockey arena $ 400
Corporate donations for hockey arena 200
Registration fees 20
Contribution for tournaments $ 35.0
Rental of hockey arena 40
Interest received 2.1
105 600 37.1
Cash outflows:
Operating expenses 102
Construction of hockey arena 600
Purchase of corporate bonds 35.0
Travel costs for tournament 2.1
102 600 37.1
Cash, end of year $ 3 $ 0 $ 0

Additional Information

  • The new hockey arena was completed in late August, Year 5. The official opening was held on August 30, with a game between the Perch Falls Old-Timers and the local firefighters. The arena is expected to have a 40-year useful life and no residual value.
  • A long-time resident of Perch Falls donated the land on which the arena was built. The land was valued at $70,000. The association gave a donation receipt to the donor.
  • A former resident of Perch Falls donated ice-making and ice-cleaning equipment to the association on April 1, Year 5. A receipt for $60,000 was issued for the donation. The equipment has a useful life of 10 years and no residual value.
  • The donation for tournaments was contributed on January 1, Year 5, with the condition that the principal amount of $35,000 be invested in 6% corporate bonds. The interest earned on the investment can be used only for travel costs for out-of-town tournaments. All investments in bonds will be held to their maturity date.
  • The provincial government pledged $50,000 a year for operating costs. Ninety percent of the grant is advanced throughout the year. Upon receipt of the associations annual report, the government will issue the last 10% of the annual grant to the association.
  • Registration fees and rental fees for the hockey arena are received at the beginning of the hockey season and cover the entire season, from September 1, Year 5, to April 30, Year 6.
  • At the end of the year, the association owed $3,000 for services received in the month of December.
  • The association wants to use the deferral method of accounting for contributions and to use three separate funds: operating fund, capital fund, and endowment fund. All capital assets are to be capitalized and amortized, as applicable, over their estimated useful lives.

Required:

Prepare a statement of financial position and statement of operations for each of the three funds as at and for the year ended December 31, Year 5. (Negative amounts should be indicated by minus sign. Leave no cell blank, be sure to enter "0" wherever required. Enter your answer in thousands. Round "Endowment Fund" answers in "Statement of Operations" to 1 decimal place. Omit $ sign in your response.)

Perch Falls Minor Hockey Association
Statement of Operations
For the Year ended December 31, Year 5
(in $000s)
Operating Fund Capital Fund Endowment Fund
Revenue
Operating grant $
Contribution for arena
Contribution of equipment
Registration fees
Rental income
Interest income
Total
Expenses
Operating expenses
Travel costs for tournament
Amortization of arena
Amortization of equipment
Total
Excess (deficiency) of revenues over expenses $ $ $

Perch Falls Minor Hockey Association
Statement of Financial Position
As at December 31, Year 5
(in $000s)
Operating Fund Capital Fund Endowment Fund
Cash $
Accounts receivable
Investment in bonds $
Land $
Hockey arena
Equipment
Accumulated amortization
$ $ $
Accounts payable $
Unearned revenue
Deferred contributions
Arena
Equipment
Total liabilities
Fund balance
Cumulative excess of revenues over expenses
Contirbution of land
Cash contribution for travel
$ $ $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions

Question

Show the product of thisreaction: Ph Br- - + NaOEt Br EIOH Ph

Answered: 1 week ago