Question

A private not-for-profit entity is working to create a cure for a deadly disease. The charity starts the year with cash of $751,000. Of this amount, unrestricted net assets total $417,000, temporarily restricted net assets total $217,000, and permanently restricted net assets total $117,000. Within the temporarily restricted net assets, the entity must use 90 percent for equipment and the rest for salaries. No implied time restriction has been designated for the equipment when purchased. For the permanently restricted net assets, 80 percent of resulting income must be used to cover the purchase of advertising for fund-raising purposes and the rest is unrestricted.

During the current year, the organization has the following transactions:

• Received unrestricted cash gifts of $227,000.
• Paid salaries of $97,000 with $37,000 of that amount coming from restricted funds. Of the total salaries, 50 percent is for administrative personnel and the remainder is evenly divided among individuals working on research to cure the designated disease and individuals employed for fund-raising purposes.
• Bought equipment for $334,000 with a long-term note signed for $267,000 and restricted funds used for the remainder. Of this equipment, 90 percent is used in research, 5 percent is used in administration, and the remainder is used for fund-raising.
• Collected membership dues of $47,000. The members receive a reasonable amount of value in exchange for these dues including a monthly newsletter describing research activities.
• Received $27,000 from a donor that must be conveyed to another charity doing work on a related disease.
• Received investment income of $30,000 generated by the permanently restricted net assets. As mentioned above, the donor has stipulated that 80 percent of the income is to be used for advertising, and the remainder may be used at the entity’s discretion.
• Paid advertising of $3,700.
• Received an unrestricted pledge of $270,000 that will be collected in three years. The entity expects to collect the entire amount. The pledge has a present value of $95,000 and related interest (additional contributed support) of $4,700 in the year.
• Computed depreciation on the equipment acquired as $37,000.
• Spent $110,000 on research supplies that it utilized during the year.
• Owed salaries of $22,000 at the end of the year. Half of this amount is for individuals doing fund-raising and half for individuals doing research.
• Received a donated painting that qualifies as a museum piece. It has a value of $970,000. Officials do not want to record this gift if possible.

1. Prepare a statement of activities for this not-for-profit entity for this year.

2. Prepare a statement of financial position for this not-for-profit entity for this year.

Prepare a statement of activities for this not-for-profit entity for this year.

For the statement of activities below, I started to fill in what I understood, Can you complete the entire statement correctly. I will comment and like

* Required A

Prepare a statement of activities for this not-for-profit entity for this year.

Statement of Activities Unrestricted Net Assets Temporarily Restricted Net Assets Permanently Restricted Net Assets Public support Contributions $227,000 $95,000 Contribution - interest 4,700 Revenue Membership dues 47,000 Investment income 6,000 24,000 Net assets released from restriction 107,700 (107,700) Total public support and revenue $387,700 $16,000 $0 Expenses Program service expenses - cure disease Salaries Depreciation (33,300) Supplies (110,000) Total $(143,300) $0 $0 Supporting service expenses - general and administrative Salaries Depreciation Total $0 $0 $0 Fundraising Salaries Advertising Depreciation Total $0 $0 $0 Total expenses $(143,300) 0 0 Change in net assets Net assets - Beginning of year 417,000 217,000 117,000 Net assets - End of year $417,000 $217,000 $117,000

• Required B

Prepare a statement of financial position for this not-for-profit entity for this year.

	Statement of Financial Position Assets Total assets $0 Liabilities Total liabilities $0 Net assets Total net assets $0 Total liabilities and net assets $0

Answer 1

Statement of Activities

	Unrestricted Net Assets	Temporarily Restricted Net Assets	Permanently Restricted Net Assets
Public support
Contributions	227000	95000
Contribution ­ interest		4700
Revenue
Membership dues	47000
Investment income	6000 (30000*20%)	24000 (30000*80%)
Net assets released from restriction	107700 (37000+(334000-267000)+3700)	(107700)
Total public support and revenue	387700	16000
Expenses
Program service expenses ­ cure disease
Salaries	35250 ((97000*25%)+(22000*50%))
Depreciation	33300 (37000*90%)
Supplies	110000
Total	178550	0	0
Supporting service expenses– General and administrative
Salaries	48500 (97000*50%)
Depreciation	1850 (37000*5%)
Total	50350	0	0
Fundraising
Salaries	35250 ((97000*25%)+(22000*50%))
Advertising	3700
Depreciation	1850 (37000*5%)
Total	40800	0	0
Total expenses	269700	0	0
Change in net assets	118000	16000	0
Net assets ­ Beginning of year	417000	217000	117000
Net assets ­ End of year	535000	233000	117000

Part 2

Statement of Financial Position

Assets
Cash (751000+227000-97000-(334000-267000)+47000+27000+30000-3700-110000)		804300
Pledge receivable (95000+4700)		99700
Equipment	334000
Accumulated depreciation	37000	297000
Total assets		1201000
Liabilities
Salaries payable		22000
Notes payable		267000
Donated amount		27000
Total liabilities		316000
Net assets
Unrestricted		535000
Temporarily restricted		233000
Permanently restricted		117000
Total net assets		885000
Total liabilities and net assets		1201000