Question

. me following transactions occurred during the fiscal year ended June 30, 20X3: Received a gift of $100,000 on July 7, 20X2, from an alumnus who stipulated that half the gift be restricted to purchase books for the university library and the remainder be used to establish an endowed scholarship fund. The alumnus further requested that the income generated by the scholarship fund be used annually to award a scholarship to a qualified disadvantaged student. On July 20, 20X2, the board of trustees resolved that the funds of the newly established scholarship endowment fund would be invested in savings certificates and purchased them on July 21, 20X2. Collected $1,900,000 of revenue from student tuition and fees applicable to the year ended June 30, 20X3. Of this amount, $66,000 was collected in the prior year, and $1,686,000 was collected during the year ended June 30, 20X3. In addition, on June 30, 20X3, the college had received cash of $158,000 representing deferred revenue fees for the session beginning July 1, 20X3. Collected $349,000 of outstanding accounts receivable at the beginning of the year ended June 30, 20X3. The balance was determined to be uncollectible and was written off against the allowance account, which on June 30, 20X3, was increased by $3,000 to $11,000. Earned and collected interest charges of $6,000 on late student fee payments during the year. Received the state appropriation during the year. The state made an additional unrestricted appropriation of $50,000 but had not paid the college as of June 30, 20X3. Received an unrestricted gift of $25,000 cash from college alumni. Sold restricted investments of $21,000 for $26,000 during the year and received temporarily restricted investment interest income amounting to $1,900. Recorded unrestricted operating expenses of $1,777,000 during the year, not including year-end accruals or transfers from other categories of net assets. On June 30, 20X3, $59,000 of these expenses remained unpaid. Had restricted current funds of $13,000 released and spent them for authorized operating purposes during the year. page 1031 Paid the accounts payable on June 30, 20X2, during the year. Earned and received during the $7,000 interest on the savings certificates purchased in accordance with the board of trustees resolutions as discussed in transaction 1. R accorda

Answer 1

P19-10 Financial Statements for a Private, Not-for-Profit College Friendly College Statement of Financial Position June 30, 20X3 and 20X2 20x3 20x2 Cash S 824,900 S217,000 Accounts receivable (student tuition and fees, less allowance for uncollectibles of $11,000 and $9.000, respectively) 137.000 341,000 State appropriations receivable 50,000 75,000 Investments 89,000 80,000 Total assets $1,100,900 $893,000 Accounts payable $ 59,000 $ 45,000 Deferred revenue 158,000 88,000 Net assets: Unrestricted 716,000 515,000 Temporarily restricted by donors 117.900 87.000 Permanently restricted by donors 50.000 Total liabilities and net assets $1,100,900 5693,000

Friendly College Statement of Activities For Year Ended June 30, 20X3 Temporarily Permanently Unrestricted Restricted Restricted Total Revenues, gains, and other support: Tuition and fees $1.900.000 $1,900,000 State appropriation 50.000 50,000 Interest income 8.000 $ 7.000 13,000 Contributions 25.000 50,000 $ 50,000 125,000 Gain on sale of investments 5,000 5,000 Investment income 1,900 1,900 Net assets released from temporary restriction 13.000 (13,000) Total revenue, gains, and other support $1,994.000 $50,900 $50,000 $2,094,900 Expenses and other deductions 1.793.000 1.793,000 Change in net assets $ 201,000 $50,900 $50,000 $ 301,900 Net assets at beginning of Year 515.000 67,000 582,000 Net assets at end of year $ 716,000 $117.900 $ 50,000 $ 883,900

Proof of selected items: (1) Cash = Beginning balance of $217,000 plus receipts of. $ 100,000 from alumnus 1,686,000 from student tuition and fees 158.000 from fee revenue deferred to next year 349,000 from outstanding accounts receivable 6,000 from interest received 75,000 from prior year's state appropriation 25,000 from unrestricted gift from alumni 26,000 from sale of investments 1.900 from investment interest income 7.000 from interest on savings certificates Less payments of: $ 50,000 to acquire savings certificates 1,718,000 to operating expenses (51.777,000 - $59.000 unpaid) 13,000 to items for restricted purposes 45,000 to prior year's accounts payable = Ending balance of $824.900

(2) Accounts receivable = Beginning balance of $350,000 gross plus $1,834,000 for net increase in tuition ($1,900,000 - $66,000) Less collections of $1,686,000 collection of current year's tuition and fees 349,000 collection of prior year's accounts receivable 1,000 write-off of remainder of prior year's receivable = Ending balance of $148,000 gross (less estimated uncollectibles of $11,000) (3) Investments - Beginning balance of $60,000 plus $ 50,000 acquire certificate of deposit Less decreases of $ 21,000 sale of restricted investments = Ending balance of $89,000

Expenses and other deductions = $1,777,000 unrestricted operating expenses recorded + 3,000 year-end accrual for increase in estimated uncollectibles + 13,000 transferred from temporarily restricted and spent in unrestricted $1,793,000