Exam 22: Accounting for Not-For-Profit Organizations

Albatross University,a not-for-profit,nongovernmental university,had the following transactions in 2014. 1.Tuition bills were sent amounting to $8,000,000,with 70% collected before the end of the fiscal year; tuition waivers were granted on the total amount of $400,000,and $220,000 was expected to be uncollectible. 2.Cafeteria sales,all cash,were $1,400,000. 3.Salaries and wages were paid amounting to $5,500,000,of which $370,000 was for cafeteria staff. 4.Long-term debt payments were made from general funds amounting to $800,000,of which $130,000 was for interest. 5.Equipment was purchased for the engineering department with funds previously set aside for that purpose,amounting to $180,000. Required: Prepare the journal entries for 2014 for Albatross University.

The FASB ASC is the primary authority over accounting principles for governmental colleges and universities.

Record the following transactions for Porter Hospital,a private,nonprofit hospital: 1.Gross patient services revenues: $25,000,000.Billed to patients. 2.Included in the above revenues are: charity services,$500,000; contractual adjustments,$11,000,000; and estimated uncollectible amounts,$250,000. 3.Purchased equipment by issuing a 5-year note for $200,000. 4.Received cash donations restricted for a capital building addition program,$5,100,000. 5.Incurred and paid $1,700,000 of contractor billings for the capital building program.

Unrestricted net assets are the portion of net assets that carry no donor-imposed stipulations.

Voluntary health and welfare organizations classify fund-raising costs as

Coats for Kids is a private,not-for-profit organization that provides free coats for children in the suburbs of a large city.Coats for Kids had the following transactions in 2014. 1.Unrestricted cash gifts that were received last year,but designated for use in the current year,totaled $50,000.The cash gifts were used in 2014. 2.Unrestricted pledges of $40,000 were received.They are expected to be collected in 2014.Ten percent of the pledges typically prove uncollectible.Additional cash contributions during the year totaled $65,000. 3.A donor donated investments with a fair value of $10,000.The investments can be sold and used only for the purchase of coats for children. 4.The following expenses were incurred and paid: Salary of director,$15,000,classified as supporting services.The remaining expenses of $47,500 were classified as program services. 5.Pledges of $250,000 were received during the year.The pledges were restricted for use in purchasing new delivery vans.All of these pledges are expected to be collected in the next fiscal year.Ten percent are estimated to be uncollectible. Required: Prepare the journal entries for the aforementioned transactions.

The following information was taken from the accounts and records of the Helping Hands Foundation,a private,not-for-profit organization classified as a VHWO.All balances are as of June 30,2014,unless otherwise noted. Unrestricted Support - Contributions \ 2,000,000 Unrestricted Support - Membership Dues 640,000 Unrestricted Revenues - Investment Income 80,000 Temporarily restricted gain on sale of investments 25,000 Expenses - Program Services 1,860,000 Expenses - Supporting Services 350,000 Expenses - Supporting Services 550,000 Temporarily Restricted Support - Contributions 640,000 Temporarily Restricted Revenues - Investment Income 60,000 Permanently Restricted Support - Contributions 100,000 Unrestricted Net Assets, July 1, 2013 450,000 Temporarily Restricted Net Assets, July 1,2013 2,100,000 Permanently Restricted Net Assets, July 1,2013 60,000 The unrestricted support from contributions was received in cash during the year.The expenses included $1,350,000 paid from temporarily-restricted cash donations. Required: Prepare Helping Hands' Statement of Activities for the fiscal year ended June 30,2014.

Not-for-profits account for revenues and expenses using the modified accrual basis of accounting.

The gift shop of a nonprofit,private hospital has cash revenue of $24,000.What account will the hospital credit?

A private,not-for-profit university received donations of $1,000,000 cash in 2014 that were restricted to certain research projects on sustainability,with an emphasis on reducing the campus waste.The university incurred and paid $450,000 of expenses on this research in 2014. In 2014,an alumnus contributed a $700,000 endowment for energy research with all endowment income restricted for that purpose.Income totaled $35,000 for the year.Energy research expenses incurred and paid were $22,000. Required: Prepare the appropriate journal entries for the university for these transactions.