Question

he Art League is a not-for-profit organization dedicated to promoting the arts within the community. There are two programs conducted by the Art League: (1) exhibition and sales of members’ art (referred to as Exhibition) and (2) Community Art Education. Activities of the Art League are conducted by a part-time administrator, a part-time secretary-bookkeeper, and several part-time volunteers. The volunteers greet visitors, monitor the security of the exhibit hall, and handle the sales of art to the public. Art on exhibit is considered the property of the member artists, not the Art League.

The post-closing trial balance for the Art League as of June 30, 2016, is shown here. ART LEAGUE Post-closing Trial Balance June 30, 2016 Credits Debits $ 2,420 13.811 6.300 1.315 10.195 $ 2.596 Cash Short-term Investments Grants Receivable Prepaid Expense Equipment Allowance for Depreciation-Equipment Long-term Investments-Permanently Restricted Accounts Payable and Accrued Expenses Deferred Revenue Unrestricted Net Assets Temporarily Restricted Net Assets Permanently Restricted Net Assets 5,937 2.819 4,500 9.181 14,945 5.937 Totals $39,978 $39,978

.1.	During the year, unrestricted cash was received from the following sources: grants, $13,300, of which $5,450 had been reported as receivable on June 30, 2016; annual contributions from fund drives and other unrestricted gifts, $14,031; membership dues, $17,135; tuition and fees for educational workshops, $7,144; and sales of members’ art, $12,180, of which 10 percent represents commissions earned by the Art League.
2.	Interest earnings were as follows: interest on unrestricted investments totaled $703; interest on temporarily restricted investments totaled $942; interest on permanently restricted investments totaled $361 (these investment earnings are temporarily restricted for program use).
3.	Grants receivable as of year-end totaled $5,360, of which $3,290 was earned in the current year (thus unrestricted) and $2,070 was reported as deferred revenue.
4.	The Art League receives free rent from the city at an estimated value of $19,700 a year.
5.	Expenses incurred during the year were as follows: salaries and fringe benefits, $48,600; utilities $3,250; postage and supplies, $1,480; and miscellaneous, $810. As of year-end, the balances of the following accounts were: Prepaid Expenses, $1,010; Accounts Payable and Accrued Expenses, $3,001.
6.	During the year, $3,750 of short-term investments were sold, with the proceeds used to purchase two computers and printer at a cost of $3,005. The resources used were temporarily restricted for the purchase of equipment.
7.	In accordance with the terms of the Art League endowment, income earned by the endowment for the provision of free art instruction for handicapped children was provided at a cost of $995. This amount was allocated to community art education.
8.	Depreciation on equipment in the amount of $1,812 was recorded.
9.	Expenses for the year were allocated 30 percent to Exhibition Program, 20 percent to Community Art Education, 30 percent to Management and General Expenses, and 20 percent to Fund-Raising.
10.	Proceeds of art sales, net of commissions charged by the Art League, totaled $10,962. This amount was paid to member artists during the year.
11.	All nominal accounts were closed at year-end.

a. Prepare journal entries to record these transactions. Expense transactions should be initially recorded by object classification, unless otherwise instructed; in entry 9, expenses will be allocated to functions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)

  

• 1 Record the unrestricted cash received during the year.

• 2 Record the interest on investment income received during the year.

• 3 Grants receivable as of year-end totaled $5,360, of which $3,290 was earned in the current year (thus unrestricted) and $2,070 was reported as deferred revenue.

• 4 The Art League receives free rent from the city at an estimated value of $19,700 a year.

• 5 Record the expenses incurred during the year.

• 6 Record the sale of short-term investments made during the year.

• 7 Record the purchase of equipment.

• 8 Record the payment made for free art education.

• 9 Record the necessary adjustment in the net assets account.

• 10 Record the depreciation on equipment.

• 11 Record the necessary adjustment in the net assets account.

• 12 Expenses for the year were allocated 30 percent to Exhibition Program, 20 percent to Community Art Education, 30 percent to Management and General Expenses, and 20 percent to Fund-Raising.

• 13 Proceeds of art sales, net of commissions charged by the Art League, totaled $10,962. This amount was paid to member artists during the year.

• 14 Record the closure of all nominal accounts at year end.

• 15 Record the transfer of investment income at the year end.

• 16 Record the transfer to the temporarily restricted account.

• 17 Record the transfer to the unrestricted accounts.

Prepare a statement of activities for the year ended June 30, 2017. (Negative amounts should be indicated by a minus sign.)

Answer 1

	Prepare Journal Entries
Sl No	Details	Debit($)	Credit($)
1	Cash	63,790
	Contribution - Unrestricted		21,881
	Grant Received		5,450
	Membership dues		17,135
	Tution fees		7,144
	Commission Revenue		1,218
	Payable to Artis		10,962
	( grant - $ 13300 less $5450 receivable
	+ unrestricted gift-$14031
	Details	Debit($)	Credit($)
2	Cash	2,006
	Investement Income - Unrestricted		703
	Investement Income - Temporary Restrcited		1,303
	( Temporary restricted is sum of
	Interest on temporary Restricted-$942
	PLUS Interest on permanently restrcited Investemnt -$361
		Debit($)	Credit($)
3	Grant Receivable	5,360
	Contribution UnRestricted		3,290
	Deferred revenue		2,070
		Debit($)	Credit($)
4	Rent Expenses	19,700
	Contribution UnRestricted		19,700
	Salary Expenses	48,600
	Uti;ity Expenses	3,250
	Postage	1,480
	Misc expenses	810
	cash- balancing Number		50,834
	prepaid Expenses		305
	Account payable		3,001
5	Cash	3,750
	Short term Investment		3,750
6	Equipment	3,005
	cash		3,005
7	Art Education Community	995
	cash		995
8	Net Asset related satusfaction- temporary restricted	995
	Net Asset related satusfaction- temporary Unrestricted		995
9	Depreciation Expenses	1,812
	allowance for depreciation		1,812
10	Net Asset related satusfaction- temporary restricted	1,812
	Depreciation Expenses		1,812
11	Exhibition Program- 30%	22,696
	Community Art education program-30%	22,696
	Management & general-25%	18,913
	Fund Raising -15%	11,348
	rent Expenses		19,700
	Salary Expenses		48,600
	Utility Expenses		3,250
	Postage		1,480
	Misc expenses		810
	Depreciation Expenses		1,812
12	Payable to Arist	10,962
	cash		10,962
13	Contribution - Unrestricted	44,871
	Membership dues	17,135
	Tution fees	7,144
	Commission Revenue	1,218
	Investment Income - unrestricted	703
	Unrestrcited net assets _ Balancing Number	4,581
	Exhibition Program- 30%		22,696
	Community Art education program-30%		22,696
	Management & general-25%		18,913
	Fund Raising -15%		11,348
14	Investment Income - Temporary Restricted	1,303
	Temporary Restricted net Assets		1,303
15	Temporary Restricted net Assets( sum of Sl No 8+9)	2,807
	Net Asset released- restricted temporary		2,807

	Unrestricted $	Temporary Restrcited-$	Permanentky Restricted-$	Total-$
Contribution - Unrestricted	44,871			44,871
Membership dues	17,135			17,135
Tution fees	7,144			7,144
Commission Revenue	1,218			1,218
Investment Income - unrestricted	703	1,303		2,006
Net Asset released from restrcition - Satisfaction purpose	2,807	-2,807
Total Revenue & other support-A	73,878	-1,504	-	72,374
Expenses
Exhibition Program- 30%	22,696			22,696
Community Art education program-30%	22,696			22,696
Management & general-25%	18,913			18,913
Fund Raising -15%	11,348			11,348
Toatl Expenses-B	75,652			75,652
Increase ( Decrease ) in net assets	-1,774	-1,504		-3,278
Net Asset Opening	9,181	14,945	5,937	30,063
Ending net Asset	7,407	13,441	5,937	26,785
Ending net Asset- $ 26785

Statement of Financial Position
Assets	Amount($)	Amount($)
Cash	6,170
Short term Investment	10,061
Grant receivable	6,210
prepaid Expenses	1,010
Asset restricted
Investment	5,937
Equipment( less depreciation Allowance)	8,792
Total Assest	38,180
Liabilities
Account payable & accrued Expenses		4,825
Deferred revenue		6,570
Total Liability		11,395
net Asset
Unrestricted		7,407
Temporary Restricted		13,441
Permanently restricted		5,937
Total Liability		26,785
Total Liability + Net Asset		38,180

Workings - All Sl No has been updated above ... Please see complete question answer ..

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Cash	Amnt($)	Amnt($)
Opening Balance	2,420
Add- Sl No 1	63,790
Add- Sl No 2	2,006
Less - Sl No 4		50,834
Add- Sl No 5	3,750
Less- Sl No 6		3,005
Less- Sl No 7		995
Less- Sl No 12		10,962
Closing balance		6,170
Total	71,966	71,966
Short term Investment	Amnt($)	Amnt($)
Opening Balance	13,811
Less- Sl No 5		3,750
Closing balance		10,061
Total	13,811	13,811
Grant Receivable	Amnt($)	Amnt($)
Opening Balance	6,300
Less Sl No 1		5,450
Add- Sl No 3	5,360
Closing balance		6,210
Total	11,660	11,660
Pre Paid	Amnt($)	Amnt($)
Opening Balance	1,315
Less Sl No 4		305
Closing balance		1,010
Total	1,315	1,315
Equipment	Amnt($)	Amnt($)
Opening Balance	10,195
Less - Accumulated Depreciation	2,596
Net Balance	7,599
Add - Cash purchase	3,005
Less - Accumulated Depreciation	1,812
Net Balance	8,792
Deferred Revenue	Amnt($)	Amnt($)
Opening Balance		4,500
add-Sl No 3		2,070
Closing Balance	6,570	6,570