jeter aa 4e solutionsmanual ch19

19 - 1

CHAPTER 19

Note: The letter A, B, or C indicated for a question, exercise, or problem means that the question,

exercise, or problem relates to a chapter appendix.

ANSWERS TO QUESTIONS

1. In 1979, the FASB took the responsibility for establishing financial accounting and reporting

standards for NNOs. Support for existing accounting and reporting practices is also contained in

Audit Guides and Statements of Position published by the AICPA.

2. NNOs use fund accounting because in many cases their resources are restricted by law, contract,

donors, other external authorities, or the organization's governing board. Fund accounting

facilitates compliance with such restrictions.

3. NNOs need to distinguish between restricted and unrestricted funds in order to separate resources

that may be used at the discretion of the governing board and those which have restrictions.

Resources not found in the unrestricted funds have contractual, external, legal, or discretionary

restrictions.

4. Unlike other NNOs, hospitals combine their revenues from unrestricted resources and restricted

resources in the General Fund accounts and financial statements. In addition, hospitals account for

property and equipment, accumulated depreciation and depreciation expense, and long-term

obligations associated with the acquisition of property and equipment in the General Fund whereas

other NNOS account for these assets and liabilities in Plant Funds.

5. Unconditional pledges are recorded as revenues while conditional pledges are not recorded until

they become unconditional. An example of unconditional pledges is when a donor makes a

nonrevocable offer to give one million dollars to a hospital. An example of conditional pledges is

when a donor offers to contribute one million dollars if the hospital receives less than ten million

dollars from government funding in the next fiscal year.

6. Nonmandatory transfers are transfers by Colleges and Universities of Board Designated Funds

from the resources of the Unrestricted Current Fund to Quasi-Endowment, Loan, Plant or other

funds maintained by the College or University.

7. Yes, board designated funds should be accounted for in the Unrestricted Current Fund (General

Fund of a hospital). The procedure for formal recognition of such designations in the Unrestricted

Current Fund by NNO's other than hospitals is similar to an appropriation of retained earnings.

Hospitals classify resources that have been designated by the board for a specific use in a separate

section of the Statement of Financial Position of the General Fund entitled Assets Whose Use is

Limited.

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19 - 2

8. Prior to the effective date of SFAS No. 116, donated services were recorded under different circumstances for each of the NNOs. The necessary conditions to be met for each NNO were Colleges:

When operated by a religious group, donated services rendered by members of the religious group should be recorded at their monetary values.

Hospitals: (1) The organization controls the employment and duties of the persons donating the service and (2) The organization has a clearly measurable basis for determining the amount of revenue and expenses to be recorded.

VHWOs: (1) and (2) from above and (3) The services performed are significant and form an integral part of the efforts of the organization and the services would be performed by salaried personnel if the donated services were not available.

ONNOs: (1), (2), (3), from above and (4) The services of the reporting organization are not principally intended for the benefit of its members.

Under the provisions of SFAS NO. 116, donated services are recognized by all NNOs only if the services received (a) create or enhance nonfinancial assets or (b) require professional skills, are provided by individuals possessing those skills, and typically would need to be purchased if not provided by donation. The provisions of SFAS 116 are effective for financial statements issued by larger NNOs for years beginning after December 15, 1994. Thus, in terms of annual financial statements, these changes will appear in financial statements distributed beginning in 1996 by larger NNOs and in 1997 by smaller NNOs.

9. Voluntary services rendered for fund raising campaigns are usually not recognized in the accounting records because of the difficulty of measuring a market value for them and because it is extremely difficult for the organization to implement effective controls over the performance of volunteer solicitors.

10. The revenue is recorded at the standard rate and any waivers or discounts are reported separately as expenditures or as reductions of gross revenue.

11. Library books owned by a university are accounted for in the Plant Fund. Depreciation expense should be recorded in the investment in plant fund. Note, prior to the issuance of SFAS No. 97 by the FASB, colleges and universities were not required to record depreciation expense.

12. Medical equipment and long-term obligations are accounted for in the General Fund of a hospital. VHWOS would use a Plant Fund to account for such equipment and the related obligation.

13. ONNOs need not record depreciation on historical treasures and works of art that have estimated useful lives that are extraordinarily long. To qualify, such assets must have cultural, historical or aesthetic value that is worth preserving perpetually and the holder must have the financial and technological ability to protect and preserve the asset.


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14. (1) Pure Endowment Fund - the principal is donated and must be maintained in perpetuity. (2) Term Endowment Fund - the donor specifies a particular date or event after which the

principal may be expended. (3) Quasi-Endowment Fund - board designated resources that are transferred from the Unrestricted

Current Fund by a college or university. Maintenance or expenditure of the principal is at the discretion of the governing board.

15. The difference between an Annuity Fund and a Life Income Fund is that under an Annuity Fund,

the beneficiary receives periodic payments of a stated amount while the beneficiary of a Life Income Fund receives periodic payments of varying amounts (depending on the fund's earnings).

Business Ethics

Business ethics solutions are merely suggestions of points to address. The objective is to raise the

students' awareness of the topics, and to invite discussion. In most cases, there is clear room for

disagreement or conflicting viewpoints.

An important aspect of the job of a president of a university is fund raising and maintaining the

visibility of the university. University presidents are hired because of the skills needed to accomplish

this goal. The president should be allowed some flexibility in choosing the strategies to implement in

pursuing this objective. This, however, does not mean that the president has unlimited spending

authority. Without proper oversight, inappropriate spending could go unchecked. Clearly, procedures

need to be developed to oversee the spending of the president. This can be accomplished through the

board of trusts of the university. Encourage students to discuss whether Gordon Gee was, or was not

within acceptable limits in the instance cited in the article.


19 - 4

ANSWERS TO EXERCISES Exercise 191 Part A Current Unrestricted Fund

Part B Unexpended Plant Fund

Exercise 192 General Fund

General Services Expense Donated Services (Nonoperating Revenue)

5,500

5,500

Exercise 193 Restricted Current Fund

Cash Contribution Revenue Poetry Collection

Net Assets Released from Restrictions

Cash Unrestricted Current Fund Cash Net Assets Released from Restrictions Expenses Poetry Collection

Cash

300,000

100,000

100,000

100,000

300,000

100,000

100,000

100,000

Exercise 194 Loan Fund

(1) Cash Revenue Contributions Restricted

100,000 100,000

(2) Loans Receivable Students Loans Receivable Faculty

Cash Bad Debt Expense

Allowance for Uncollectible Loans Students Allowance for Uncollectible Loans Faculty

60,000 40,000

10,000

100,000

6,000 4,000

(3) Allowance for Uncollectible Loans Students

Loans Receivable Students

1,000 1,000


19 - 5

Exercise 19-4 (continued)

(4) Cash Loans Receivable Students Loans Receivable Faculty Interest Income

16,300 10,000 5,000 1,300

Exercise 195 Proportional Interest Interest and Dividends

Realized

Gains

Restricted Fund (105/420)

Quasi-Endowment (147/420)

Life Income (168/420)

Total

Loan Fund

25%

35%

40%

100%

$ 7,500

10,500

12,000

$ 30,000

$ 5,000

7,000

8,000

$ 20,000

Cash

Investments

Investment Income

Quasi-Endowment Fund

7,500

5,000

12,500

Cash

Investments

Investment Income

Life Income Fund

10,500

7,000

17,500

Cash

Investments

Investment Income

12,000

8,000

20,000

Exercise 196 2008 Current Unrestricted Fund

(1)

(2)

Pledges Receivable

Revenue - Contributions

Expense - Provision for Uncollectible Pledges

Allowance for Uncollectible Pledges

1,000,000

250,000

1,000,000

250,000

2009 (3)

(4)

Cash

Pledges Receivable

Provision for Uncollectible Pledges

Allowance for Uncollectible Pledges

Pledges Receivable

700,000

50,000

250,000

700,000

300,000


19 - 6

Exercise 197

Endowment Fund

(1)

Cash Revenue Contribution - Restricted

2,000,000 2,000,000

(2)

Investments Cash

2,000,000 2,000,000

(3)

Cash Due to General Fund Due to Specific Purpose Fund

400,000 300,000 100,000

(4)

Due to General Fund Due to Specific Purpose Fund

Cash

300,000 100,000

400,000

(8) Transfer to Plant Replacement and Expansion Fund Cash

2,000,000 2,000,000

General Fund

(3)

Due from Endowment Fund Unrestricted Income from Endowment Fund

300,000 300,000

(4)

Cash Due from Endowment Fund

300,000 300,000

(5)

Other Professional Services - Research Other Operating Revenue

80,000 80,000

(6)

Assets Whose Use is Limited Cash

80,000 80,000

(7) Loans Receivable Cash

180,000 180,000

Specific Purpose Fund

(3) (4)

Due from Endowment Fund Fund Balance

Cash Due from Endowment Fund

Fund Balance Cash

100,000

100,000

80,000

100,000

100,000

80,000

Plant Replacement and Expansion Fund

(8)

Cash Transfer from Endowment Fund - Restricted

2,000,000

2,000,000

Endowment Fund

(1)

Fund Balance Term Cash

2,000,000 2,000,000


19 - 7

Exercise 198 Endowment Fund (1) Endowment fund balance 3,000,000 Cash 3,000,000 Unexpended Plant Fund

(1) (2) (3) (4) (4)

Cash Fund Balance - Restricted

Construction in Process

Cash Accounts Payable

Construction in Process Accounts Payable

Cash Building

Work in Process Fund Balance - Restricted Fund Balance - Unrestricted

Building Investment in Plant Fund

Building Net Investment in Plant

3,000,000

1,000,000

2,100,000 30,000

3,100,000

3,000,000 100,000

3,100,000

3,000,000

970,000 30,000

2,130,000

3,100,000

3,100,000

3,100,000 Exercise 19-9 Exercise 19-10 Exercise 19-11

1. b 1. d 1. d 2. a 2. c 2. c 3. c 3. a 3. a 4. d 4. c 4. c 5. C 5. C

Exercise 19-12 Exercise 19-13 Exercise 19-14

1. d 1. b 1. a 2. b 2. b 2. d 3. b 3. c 3. d 4. c 4. c 4. d 5. A


19 - 8

ANSWERS TO PROBLEMS

Problem 191

Statement of Activities

Patient Service Revenue

Allowances and Uncollectible Accounts

Net Patient Service Revenue

$16,000,000

(3,400,000)

12,600,000

Other Operating Revenue (includes $160,000 from specific purpose funds)

Total Operating Revenue

346,000

12,946,000

Operating Expenses (includes depreciation of $500,000)

Loss from Operations

13,370,000

(424,000)

Nonoperating Revenue:

Unrestricted Gifts and Requests

Unrestricted Income from Endowment Funds

Income from Board-Designated Funds

Total Nonoperating Revenue

Excess of Revenue over Expenses

410,000

160,000

82,000

652,000

$228,000


19 - 9

Problem 192

Trial Balance

Adjustments

General Fund

Endowment Fund

Plant Replacement

Fund

Account Description Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit

Cash $50,000 $50,000

Investment in U.S. Treasury Bills 105,000 $105,000

Investment in Common Stock 417,000 $ 417,000

Interest Receivable 4,000 4,000

Accounts Receivable 40,000 40,000

Inventory 25,000 25,000

Land 407,000 (2)$385,000 22,000

Building 245,000 (3)$100,000 345,000

Equipment 283,000 283,000

Allowance for Depreciation 376,000 (4) $62,000 $438,000

Accounts Payable 70,000 70,000

Bank Loan 150,000 150,000

Endowment Fund Balance 119,500 (1) 14,500 $105,000

Other Fund Balances 860,500 (2) 385,000 (1) 14,500

(4) 62,000 (3) 100,000

(5) 528,000

Plant Replacement Fund Balance (5) 417,000 $417,000

General Fund Balance (5) 111,000 111,000

Totals $1,576,000 $1,576,000 $1,089,500 $1,089,500 $769,000 $769,000 $105,000 $105,000 $417,000 $417,000


19 - 10

Problem 192 (continued)

Adjusting Entries (not required)

(1) Endowment Fund Balance

Other Fund Balances

To eliminate from the Endowment Fund Balance the investment

income earned on U.S. Treasury Bills

14,500

14,500

(2)

Other Fund Balance

Land

To eliminate from the land account the $380,000 appraisal increase and

the $5,000 cost of the old building which was demolished.

385,000

385,000

(3) Building

Other Fund Balance

To eliminate the appraisal decrease and restate the hospital building at

its actual cost.

100,000

100,000

(4) Other Fund Balances

Allowance for Depreciation

To correct the allowance for depreciation through December 31, 2008

in accordance with the following computation:

Building - $300,000 at 2% times 41 years

Elevator - $45,000 at 5% times 15 years

Equipment ascertained to be accurate Total accumulated depreciation, as computed

Less accumulated depreciation per books

Understatement of accumulated depreciation

62,000

$246,000

33,750

158,250

438,000

376,000

$62,000

62,000

(5) Other Fund Balances

Plant Replacement Fund

General Fund

To close out Other Fund Balances and to allocate its balance to the

General Fund and the Plant Replacement Fund.

528,000

417,000

111,000


19 - 11

Problem 193 CENTURY UNIVERSITY Transactions for the Year Ended June 30, 2008

Part A Current Funds

Endowment Fund Unrestricted Restricted

Account Debit Credit Debit Credit Debit Credit

(1) Cash

Contribution Revenue

To record receipt of cash gift for purchase of books

50,000

50,000

Cash

Contribution Revenue

To record receipt of cash gift to establish scholarship fund

50,000

50,000

Investment in Savings Certificates

Cash

To record purchase of savings certificates

50,000

50,000

(2) Cash

Deferred Revenue

Accounts Receivable

Revenue

To record tuition and fees revenue

1,686,000

66,000

148,000

1,900,000

Cash

Deferred Revenue

To record deferred revenue at June 30, 2008

158,000

158,000

(3) Cash

Allowance for Uncollectible Accounts

Accounts Receivable

349,000

1,000

350,000

(4) Cash

Revenue

6,000

6,000

To record interest earned on late student fee payments


19 - 12


Current Funds Endowment Fund

Unrestricted Restricted


(5) Cash

State Appropriation Receivable

Revenue

State Appropriation Receivable

75,000

50,000

50,000

75,000

To record receipt of regular appropriation and to record

additional appropriation

(6) Cash

Revenue

To record receipt of unrestricted gift

25,000

25,000

(7) Cash

Investment

Fund Balance

To record sale of investments

Cash

Investment Income

To record income earned on investments

26,000

1,900

21,000

5,000

1,900

(8) Expenses

Accounts Payable

Cash

1,777,000

59,000

1,718,000

(9) Expenditures

Cash

To record payment of authorized expenditures

Fund Balance

Revenue

To record as revenue amounts expended for restricted

purposes

13,000

13,000

13,000

13,000


19 - 13

Problem 193 (continued) Current Funds

Endowment Fund Unrestricted Restricted


(10) Accounts Payable Cash

45,000 45,000

(11) Cash Due to Current Restricted Fund

To record receipt of interest income on savings certificates purchased by Endowment Fund

7,000 7,000

Due from Endowment Fund Fund Balance

7,000 7,000

To record income due from Endowment Fund for Scholarships Part B CENTURY UNIVERSITY

Statement of Activities For the Year Ended June 30, 2008

Current Funds Endowment Fund

Unrestricted Restricted

Revenue and additions: Unrestricted current fund revenues Private gifts restricted Endowment income - restricted Realized gains on investments restricted Investment income restricted

Total revenue & additions

$1,981,000

$1,981,000

$50,000 7,000 5,000

1,900 $63,900

$50,000

50,000 $0

Expenditures: Educational & general

Total expenditures

$1,780,000 $1,780,000

$13,000 $13,000

0

Net increase for the year Fund balance at beginning of year Fund balances at end of year

201,000 515,000 $716,000

50,900 67,000 $117,900

50,000 0 $50,000


19 - 14


Part C

CENTURY UNIVERSITY

Statement of Activities

For the Year Ended June 30, 2008

Current Funds Total

Revenue and additions:

Tuition and fees

State appropriations

Private gifts and grants

Interest on deferred tuition

Total current revenue

Expenditures:

Educational and general

Total expenditures

Unrestricted

$1,900,000

50,000

25,000

6,000

1,981,000

1,780,000

1,780,000

Restricted

$13,000

13,000

13,000

13,000

$1,900,000

50,000

38,000

6,000

1,994,000

1,780,000

1,780,000

Excess of restricted receipts over transfers to revenue 50,900 50,900

Net increase in fund balance $201,000 $50,900 $264,900


19 - 15

Problem 194

Event Fund Journal Entry

1 Endowment Fund Brown

Cash

Revenue

10,000

10,000

2 Endowment Fund Gross

Cash

Revenue

20,000

20,000

3 Endowment Fund Norton

Cash

Revenue

30,000

30,000

4 Annuity Fund

Cash

Revenue-contribution

Annuity Payable

($10,000 8.1109)

205,000

123,891

81,109

5 Endowment Fund Jackson

Investments (1,000)($150)

Revenue

150,000

150,000

6A Endowment Fund Brown

Investments (1/3)($30,000)

Cash

10,000

10,000

6B Endowment Fund Gross

Investments (2/3)($30,000)

Cash

20,000

20,000

7 Endowment Fund Norton

Investments

Cash

30,000

30,000

8 Annuity Fund

Investments

Cash

200,000

200,000

Interest computations ($30,000)(.12) = $3,600, 1/3 of $3,600, or $1,200 to Brown, 2/3 of $3,600, or $2,400 to Gross

($30,000)(.10)=$3,000 to Norton


19 - 16

Problem 19-4 (continued)


9A1 Endowment Fund Brown

Cash

Due to Unrestricted Current Fund

600

600

9A2 Unrestricted Current Fund

Due from Endowment Fund Brown Investment Income

600

600

9B1 Endowment Fund Gross

Cash

Due to Restricted Current Fund

1,200

1,200

9B2 Restricted Current Fund

Due from Endowment Fund - Gross

Investment Income

1,200

1,200

9C1 Endowment Fund - Norton

Cash

Due to Loan Fund

1,500

1,500

9C2 Loan Fund

Due From Endowment Fund - Norton

Investment Income

1,500

1,500

9D Annuity Fund

Cash (8%)($200,000)/2

Annuity payable

8,000

8,000

9E Endowment Fund - Jackson Cash

Investment Income (BIM

dividend)

4,000

4,000

9F1 Endowment Fund - Brown

Due to Unrestricted Current Fund

Cash

600

600

9F2 Unrestricted Current Fund

Cash

Due from Endowment Fund -

Brown

600

600

9G1 Endowment Fund - Gross

Due to Restricted Current Fund

Cash

1,200

1,200

9G2 Restricted Current Fund

Cash

Due from Endowment Fund -

Gross

1,200

1,200


19 - 17



9H1 Endowment Fund - Norton

Due to Loan Fund

Cash

1,500

1,500

9H2 Loan Fund

Cash

Due from Endowment Fund Norton

1,500

1,500

10 Annuity Fund Annuity Payable

Cash

10,000

10,000

11 Endowment Fund - Brown

Cash

Investments

Fund Balance

6,800

6,667

133

Endowment Fund - Gross

Cash

Investments

Fund Balance

13,600

13,333

267

12 Loan Fund

Loan Receivable

Cash

300

300

13 Annuity Fund

Unexpended Plant Fund

Annuity Payable

Revenue

Due to Unexpended Plant Fund

Due from Annuity Fund

Fund Balance Restricted

79,109

123,891

203,000

203,000

203,000

14 Restricted Current Fund (1) Expenses Scholarship Cash

200

200


19 - 18



15 Annuity Fund

Cash Investment income Investments

206,000 6,000

200,000

Annuity Fund Investment income) Due to unexpended plant fund

6,000 6,000

Unexpended Plant Fund Due from annuity fund Fund balance restricted

6,000 6,000

16 Endowment Fund Norton (1A) Cash Due to Loan Fund

(1B) Due to Loan Fund Cash

1,500

1,500

1,500

1,500

Loan Fund

(2A) Due from Endowment Fund - Norton

Investment income (2B) Cash

Due from Endowment Fund Norton

1,500

1,500

1,500

1,500 Endowment Fund-Brown Cash

Due to unrestricted current fund 200

200 Unrestricted current fund Due from endowment fund - Brown

Endowment income 200

200 Endowment Fund-Gross Cash

Due to restricted current fund 400

400 Restricted Current Fund -

Gross

Due from Endowment Fund - Gross

Investment Income

400 400

** Note: These entries assume the cash due on January 1 was received on December 31.

17 Loan Fund

Cash Loan Receivable Interest income

105 100

5

18 Annuity Fund

(1) Due to Unexpended Plant Fund Cash

209,000 209,000


19 - 19

Problem 194 (continued) Unexpended Plant Fund

Investment in Plant

(2) Cash Due from Annuity Fund Mortgage Payable

(3) Building

Cash (4) Fund Balance Restricted Mortgage Payable

Building (5) Building

Mortgage Payable Net Investment in Plant

250,000

250,000

209,000 41,000

250,000

209,000 41,000

250,000

250,000

41,000 209,000


19 - 20

Problem 195 Part A 1. Cash

Revenue - Service Fees

Revenue - Book Rentals & Fines

151,000

30,000

121,000

2. Cash

Grant Receivable

Grant Receivable

Support Grants

40,000

20,000

40,000

20,000

3. Cash (Unrestricted)

Cash Temporarily Restricted Contributions Gifts Contributions Restricted Support

215,000

108,000

215,000

108,000

4. Cash

Investment Income

75,000

75,000

5. Expenses - Circulating Library

Expenses - Research Library

Expenses - Exhibits

Expenses - Community Services

Expenses - General & Administrative

Expenses - Fund Raising

Accounts Payable

189,000

74,000

15,000

12,000

166,000

103,000

559,000

6. Accounts Payable

Cash

500,000

500,000

7. Expenses - Research Library


Accrued Expenses

5,000

3,000

8,000

8. Net Assets Released from Restrictions

Cash Temporarily Restricted Cash Unrestricted Net Assets Released from Restrictions

68,000

68,000

68,000

68,000

9.

Investments

Investment Income

15,000

15,000

10. Expenses - Circulating Library

Expenses - Research Library


Accumulated Depreciation

3,500

2,900

2,600

9,000


19 - 21


11. Expenses - Exhibits


Prepaid Expenses

3,700

1,300

5,000

Part B

PRESTON LIBRARY Statement of Financial Position, February 28, 2008

Assets

Current Assets Cash Grants Receivable Prepaid Expenses

Total Investments (at market) Land, Buildings, and Equipment

Less accumulated depreciation of $59,000 Total Assets

Liabilities and Fund Balances

Current Liabilities Accounts Payable & Accrued Expenses

Total Long-term Debt Fund Balances

Total Liabilities and Fund Balances

Unrestricted

$334,000 60,000

60,000 454,000

1,035,000

521,000 $2,010,000

$ 217,000 217,000 200,000

1,593,000 $2,010,000

Temporarily Restricted $120,000

________ $120,000

120,000 $ 120,000


19 - 22


PRESTON LIBRARY Statement of Activities

For Year Ended February 28, 2008 Support & Revenue

Support Grants Gifts

Total Revenue

Service Fees Book Rental & Fines Investment Income

Total Net Assets Released from Restrictions

Total Revenue, Gains and Other Support Expenses

Program Services Circulating Library Research Library Exhibits Community Services

Total

Support Services General & Administrative Fund Raising

Total Total

Increase (decrease) in Net Assets Fund Balances Beginning of Year Fund Balances End of Year

Unrestricted

$20,000

215,000 235,000

30,000

121,000 90,000 241,000 68,000 $544,000

$192,500 81,900 18,700

12,000 305,100

172,900 103,000 275,900 $ 581,000

($37,000)

1,630,000 $1,593,000

Temporarily Restricted

108,000 108,000

(68,000) 40,000

40,000 80,000

$ 120,000

20-2

0


19 - 23

Problem 196 BLOOD DONORS OF AMERICA FOUNDATION

Statement of Financial Position, December 31, 2008 Current

Unrestricted Restricted Plant Endowment Total

ASSETS Cash $230,000 $155,000 $15,000 $70,000 $470,000 Accounts Receivable 160,000 160,000 Allowance for Doubtful Accounts (30,000) (30,000) Pledges Receivable 930,000 930,000 Allowance for Doubtful Pledges (130,000) (130,000) Inventories 400,000 400,000 Investments 8,205,000 6,380,000 935,000 3,780,000 19,300,000 Land 1,300,000 1,300,000 Buildings and Improvements 46,500,000 46,500,000 Equipment 2,700,000 2,700,000 Accumulated Depreciation (13,500,000) (13,500,000) Other Assets 200,000 200,000

Total Assets $9,165,000 $7,335,000 $37,950,000 $3,850,000 $58,300,000

LIABILITIES AND FUND BALANCES

Accounts Payable $665,000 $35,000 $700,000 Accrued Expenses 130,000 130,000 Deferred Revenue Unrestricted 100,000 100,000 Deferred Capital Additions 1,600,000 1,600,000 LongTerm Debt 7,350,000 7,350,000

Total Liabilities 895,000 35,000 8,950,000 9,880,000

Fund Balances Plant Fund 29,000,000 29,000,000 Endowment Fund 3,850,000 3,850,000 Restricted Fund 7,300,000 7,300,000 Unrestricted Fund 8,270,000 8,270,000

Total Fund Balances 8,270,000 7,300,000 29,000,000 3,850,000 48,420,000

Total Liabilities and Fund Balance $9,165,000 $7,335,000 $37,950,000 $3,850,000 $58,300,000


19 - 24

Problem 197

Part A January 1, 2009

Restricted Fund ($70,000/$500,000) 14%

Lambert Endowment Fund ($210,000/$500,000) 42%

Plant Fund ($220,000/$500,000)

44%

January 3, 2010

Current market value = $540,000 - 0.44 $540,000 + $117,600 = $420,000

Restricted Fund ((0.14 $540,000)/$420,000) 18%

Lambert Endowment Fund ((0.42 $540,000)/$420,000) 54%

Fargot Annuity Fund ($117,600/$420,000) 28%

Part B

Date Fund Journal Entry Debit Credit

12/31/2009 Restricted

Cash (($15,000 + $10,000) 0.14)

Investments ($20,000 0.14)

Deferred Support

3,500

2,800

6,300

Lambert

Endowment

Cash (($15,000 + $10,000) 0.42)


Investment Income

10,500

8,400

18,900

Plant

Cash (($15,000 + $10,000) 0.44)


Deferred Support

11,000

8,800

19,800

12/31/2010 Restricted

Cash (($25,000 + $15,000) 0.18)


Deferred Support

7,200

5,400

12,600

Lambert

Endowment

Cash (($25,000 + $15,000) 0.54)


Investment Income

21,600

16,200

37,800

Fargot

Annuity

Cash (($25,000 + $15,000) 0.28))


Investment Income

11,200

8,400

19,600


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