Question

At the end of last year, Company X reported the following trial balance:

Beginning Balances: Cash Investments Contributions Receivable PPE, net Payables Long-term Liabilities Net Assets - Unrestricted Net Assets - Temporarily Restricted Net Assets - Permanently restricted $144,000 1,920,000 416,000 960,000 S320,000 640,000 1,280,000 880,000 320,000 $3,440,000 $3,440,000

At year-end, the investments are allocated as follows:

These investments earn a 3% cash return during the following year.

During the following year, Company X received $2,240,000 of unrestricted donations, $224,000 of donations whose use is temporarily restricted by donors as to use, and $36,000 of donations that are permanently restricted (i.e., only the interest can be used to cover program expenses if so approved by the Board of Trustees—no such approval was granted during the current year). All contributions are on account when made. Program and support expenses for the current year are $2,080,000 and $296,000, respectively, both on account. Of the program expenses, $160,000 are funded from temporarily restricted funds as they are used for approved expenditures. During the year, Wings purchased an airplane for a cash purchase price of $232,000 and recorded depreciation expense on existing depreciable assets of $72,000. The organization purchased additional investments with excess cash in the amount of $96,000 and also repaid $92,000 principal amount of long-term debt. Finally, during the year, the organization collected $2,400,000 of contributions receivable and paid $2,320,000 of accounts payable.

A) Prepare journal entries for the organization’s financial activities during the year.

B) Prepare the year-end Statement of Activities and Statement of Financial Position.

Answer 1