Question

1 -6 nts eBook Print The Watson Foundation, a private not-for-profit entity, starts 2020 with cash of $100,000, contributions receivable (net) of $200,000, investments of $300,000, and land, buildings, and equipment (net) of $200,000. Net assets without donor restrictions were reported as $400,000, the same figure as the net assets with donor restrictions. Of the restricted net assets, $300,000 was purpose restricted whereas the other $100,000 had to be held permanently, although the subsequently earned income is without restriction. Fifty percent of the purpose restricted net assets had to be used to help pay for a new building. The remainder was restricted to the payment of officer salaries. Donors made no stipulations about the eventual reporting of buildings and other long-lived assets when acquired. Watson has one program service (health care) and two supporting services (fundraising and administrative). During the current year, Watson Foundation has the following transactions. 1. Computed interest of $20,000 on the unrestricted contribution receivable. 2. Received cash of $100,000 from the contributions receivable and wrote off another $4,000 as uncollectible. 3. Received unrestricted cash donations of $180,000. 4. Received $23,000 in cash that must be spent for a particular type of office machine within the next year or the money must be returned. 5. Paid salaries of $90,000. Of that amount, $35,000 came from restricted funds. The payment was made to individuals doing health care work. 6. Spent the $23,000 in (4) for the appropriate office machine. 7. Received a cash gift of $12,000 that Watson must convey to another specified charity. However, Watson has the right to give this money to a different organization if officials so choose. 8. Bought a building for $500,000 by signing a long-term note for $450,000 and using restricted funds for the remainder. 9. Collected annual membership dues of $30,000. Individuals receive substantial benefits from their memberships. By the end of the year, two-thirds of the time for the average membership has passed. 10. Received unrestricted income of $60,000 generated by net assets that must be held permanently. 11. The board of directors of the Watson Foundation vote to set aside $9,000 of its investments for emergency purposes. 12. Paid rent of $12,000 for the past month, advertising of $15,000, and utilities of $16,000. These were half for the program service and one-fourth each for the two supporting services. 13. Received an unrestricted pledge of $200,000. Watson will collect the money in five years and does not expect any part to be uncollectible. Present value at inception is $149,000, but interest for the year to date is $6,000. 14. Computed depreciation of $40,000, 60 percent for health care, 30 percent for administrative, and 10 percent for fundraising. 15. Paid $15,000 in interest on the note signed in (8). All of this cost is assumed to be related to health care. Required: a. Prepare a statement of activities for the Watson Foundation for this year. (Negative amounts should be indicated by a minus sign.)

Answer 1

Statement of activities

revenue. 253,000 450000 WATSON FOUNDATION STATEMENT OF ACTIVITIES For Year Ending December 31, 2020 Net Assets Net Assets Pes manently Particulars. Without Donor with Donor Restricted Net Assets Restriction Restriction. Contribution revenue! Donations 180,000 1 6 1,000 (149000 +12009 Interest. 20,000 6,000 Total. 200,000 167,000 I westment income 23,000 Exchange revenues-member 30,000 Total contribution and 167,000 Net asset realised from 85,000 (85,000) revenue (35000+500 og Total contributions, revenues and net asset realised 338,000 8 2,000 from restrictions. Expenses: OS Program sewice e-healthcare Salary Rent in 16.000 Advertising 7,500 Utilistes 18.000 24,000 Interest 15,000 supporting sewices- Fundraising 3.000 Joll Rent Advertising 3,750 utilities 4,000 Depreciation 4,000 Supporting sewices admist Rent 3,000 How extising 3,750 Utilities 4,000 Deprecation 12,000 Total expenses 98,00 0 Depreciation for JUS rative

Expenses q tatal 240,000 82,000 contributions, revenues and net assets y realised from restriction over en penses. Net asset at the beginning of the year Net asset at the end of the year. 400,000 300,000 100.000 640,000 382,000 100,000

Statement of financial position

WATSON STATEMENT FOUNDATION FINANCIAL POSITION December 31, 2020 Assets cash 447,000 contributions receivable (net) 275.000 Investments 100,000 Inwestments - internally restricted 60,000 Land, buildings, and equipment (het ) 700090 660000 Total assets. 148 2,000 Liabilities Deferred revenues. Notes payable 4500 Total liability Net Assets without donoy restrictions: Unrestricted 640000 Board-designed for emergency purpos LOOOOO with donor restrictions 382000 103200 Total net assets 14 82 000 Total liability 4 net anets 1482000 0