Question
The Watson Foundation, a private not-for-profit entity, starts 2015 with cash of $100,000; contributions receivable (net) of $200,000; investments of $300,000; and land, buildings, and
The Watson Foundation, a private not-for-profit entity, starts 2015 with cash of $100,000; contributions receivable (net) of $200,000; investments of $300,000; and land, buildings, and equipment of $200,000. In addition, its unrestricted net assets were $400,000, temporarily restricted net assets were $100,000, and permanently restricted net assets were $300,000. Of the temporarily restricted net assets, 50 percent must be used to help pay for a new building; the remainder is restricted for salaries. No implied time restriction was designated for the building when purchased. For the permanently restricted net assets, all income is unrestricted. |
During the current year, the entity has the following transactions: |
Computed interest of $20,000 on the contributions receivable. | ||
Received cash of $100,000 on the contributions and wrote off another $4,000 as uncollectible. | ||
Received unrestricted cash gifts of $180,000. | ||
Paid salaries of $90,000 with $15,000 of that amount coming from restricted funds. | ||
Received a cash gift of $12,000 that the entity must convey to another charity. However, Watson has the right to give the money to a different organization if it so chooses. | ||
Bought a building for $500,000 by signing a long-term note for $450,000 and using restricted funds for the remainder. | ||
Collected membership dues of $30,000. Individuals receive substantial benefits from the memberships. | ||
Received income of $30,000 generated by the permanently restricted net assets. | ||
Paid rent of $12,000, advertising of $15,000, and utilities of $16,000. | ||
Received an unrestricted pledge of $200,000; it will be collected in five years. The organization expects to collect the entire amount. Present value is $149,000. It then recognized interest of $6,000 for the year. | ||
Computed depreciation as $40,000. | ||
Paid $15,000 in interest on the note signed to acquire the building. A.) Prepare a Statement of Activities for this entity for this year B.)
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