Question

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The 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, 2019, is shown here.

ART LEAGUE Post-closing Trial Balance June 30, 2019

Following is information summarizing the transactions of the Art League for the year ended June 30, 2020.

ART LEAGUE Post-closing Trial Balance June 30, 2019 Debits Credits Cash Short-termInvestments Grants Receivable Prepaid Expense Equipment Allowance for Depreciation-Equipment Long-Term Investments-With Donor Restrictions Accounts Payable and Accrued Expense:s Deferred Revenue Net Assets Without Donor Restrictions Net Assets With Donor Restrictions-Programs Net Assets With DonorRestrictions-Permanent Endowment $ 2,980 12,211 4,700 1,075 9,395 $ 2,436 5,777 2,659 2,900 9,021 13,345 $36,138 $36,138 Totals

1. During the year, unrestricted cash was received from the following sources: grants, $11,700, of which $4,650 had been reported as receivable on June 30, 2019; annual contributions from fund drives and other unrestricted gifts, $13,871; membership dues, $16,335; tuition and fees for educational workshops, $6,984; and sales of members’ art, $12,020, of which 10 percent represents commissions earned by the Art League.

2. Interest earnings were as follows: interest on investments without donor restrictions totaled $687; interest on investments restricted for programs totaled $926; interest on investments in the permanent endowment totaled $345 (these investment earnings are restricted for program use).

3. Grants receivable of $5,040 were recorded at year-end on a grant to complete and deliver a survey of art programs conducted in its county (the grant was determined to be an exchange transaction). Of the $5,040 the Art League had invoiced, $3,130 related to work done this year with the remaining $1,910 to be completed the first part of the new year and thus was reported as deferred revenue at year end.

4. The Art League receives free rent from the city at an estimated value of $18,100 a year.

5. Expenses incurred during the year were as follows: salaries and fringe benefits, $47,000; utilities $3,090; printing and postage, $1,320; and miscellaneous, $650. As of year-end, the balances of the following accounts were Prepaid Expenses, $850, and Accounts Payable and Accrued Expenses, $2,761.

6. During the year, $2,950 of short-term investments were sold, with the proceeds used to purchase two computers and a printer at a cost of $2,845. The resources used were 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 children with disabilities was provided at a cost of $835. This amount was allocated to community art education.

8. Depreciation on equipment in the amount of $1,652 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 $10,818. This amount was paid to member artists during the year.

11. All nominal accounts were closed at year-end.

Required 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.)

Answer 1

JOURNAL ENTRIES

SL.NO	JOURNAL ENTRY	DEBIT	CREDIT
1	CASH A\C (11700+13871+16335+6984+12020) TO GRAND RECEIVABLE TO GRAND RECEIVED TO ANNUAL CONTRIBUTION TO MEMBERSHIP TO TUITION AND FEES FOR EDUCATIONAL WORKSHOPS TO SALES OF MEMBERS’ ART TO COMMISSION	60910	4650 7050 13871 16335 6984 10928 1092
2	INVESTMENTS WITHOUT DONOR RESTRICTIONS A\C DR INVESTMENTS RESTRICTED FOR PROGRAMS A\C DR INVESTMENTS IN THE PERMANENT ENDOWMENT A\C DR TO INTEREST ON INVESTMENT	687 926 345	1958
3
4	NO ENTRY
5	: SALARIES AND FRINGE BENEFITS UTILITIES PRINTING AND POSTAGE MISCELLANEOUS, TO CASH	47000 3090 1320 650	52060
6	COMPUTERS AND A PRINTER A\C DR EQUIPMENT A\C DR TO SHORT TERM INVESTMENT	2845 105	2950
7
8	DEPRECIATION A\C DR TO EQUIPMENT	1652	1652
9