Question

The Ombudsman Foundation is a private not-for-profit organization providing training in dispute resolution and conflict management. The Foundation had the following preclosing trial balance at December 31, 2017, the end of its fiscal year:

Trial Balance—December 31, 2017		Debits			Credits
Accounts payable				$	23,900
Accounts receivable (net)	$	45,800
Accrued interest receivable		15,800
Accumulated depreciation					3,313,400
Cash		111,100
Contributed services—unrestricted					25,500
Contributions—unrestricted					2,346,000
Contributions—temporarily restricted					796,000
Contributions—permanently restricted					2,704,000
Current pledges receivable (net)		76,500
Education program expenses		1,535,100
Fund-raising expense		118,300
Grant revenue—temporarily restricted					87,700
Training seminar expenses		4,544,100
Land, buildings, and equipment		5,608,700
Long-term investments		2,743,200
Management and general expense		372,200
Net assets:
Unrestricted (January 1)					467,000
Temporarily restricted (January 1)					671,900
Permanently restricted (January 1)					1,274,500
Net gains on endowment investments—unrestricted					17,800
Noncurrent pledge receivables (net)		371,300
Program service revenue—unrestricted					5,688,500
Postemployment benefits payable (noncurrent)					191,200
Reclassifications:
Satisfaction of program restrictions		254,300
Satisfaction of time restrictions		208,500
Satisfaction of program restrictions					254,300
Satisfaction of time restrictions					208,500
Research program expenses		1,282,700
Short-term investments		750,400
Supplies inventory		32,200
Totals	$	18,070,200		$	18,070,200

Required:
a. Prepare closing entries for the year-end, using separate entries for each net asset classification.
b. Prepare a Statement of Activities for the year ended December 31, 2017.
c. Prepare a Statement of Financial Position as of December 31, 2017.
  

Answer 1

Solution A: Closing Entries					Solution B
Particular(s)	Debit (in $)	Credit (in $)			Statement of Activities during the year 31st Dec., 2017
					Expenditures	Amount (in $)	Incomes	Amount (in $)
Statement of Activities A/c Dr..	7,852,400				To Education program expenses	1,535,100	By Net gains on endowment investments—unrestricted	17,800
To Education program expenses		1,535,100			To Fund-raising expense	118,300	By Program service revenue—unrestricted	5,688,500
To Fund-raising expense		118,300			To Training seminar expenses	4,544,100	By Contributed services—unrestricted	25,500
To Training seminar expenses		4,544,100			To Management and general expense	372,200	By Contributions—unrestricted	2,346,000
To Management and general expense		372,200			To Research program expenses	1,282,700	By Contributions—temporarily restricted	796,000
To Research program expenses		1,282,700			To Excess of Incomes over expenditure (balancing figures)	3,813,100	By Contributions—permanently restricted	2,704,000
(Being expenses transferred to statement of activities)							By Grant revenue—temporarily restricted	87,700
Net gains on endowment investments—unrestricted A/c Dr..	17,800					11,665,500		11,665,500
Program service revenue—unrestricted A/c Dr..	5,688,500
Contributed services—unrestricted A/c Dr..	25,500				Solution C
Contributions—unrestricted A/c Dr..	2,346,000				Statement of Finanacial Possition as on 31st Dec., 2017
Contributions—temporarily restricted A/c Dr..	796,000				Liabilities	Amount (in $)	Assets	Details	Amount (in $)
Contributions—permanently restricted A/c Dr..	2,704,000				Excess of Incomes over expenditure (balancing figures)	3,813,100	Land, buildings, and equipment	5,608,700
Grant revenue—temporarily restricted A/c Dr..	87,700				Accounts payable	23,900	Less: Accumulated depreciation	(3,313,400)	2,295,300
To Statement of Activities A/c		11,665,500			Postemployment benefits payable (noncurrent)	191,200	Long-term investments		2,743,200
(Being Incomes transferred to statement of activities)					Other liabilities		Noncurrent pledge receivables (net)		371,300
					Unrestricted (January 1)	467,000	Accounts receivable (net)		45,800
Statement of Activities A/c Dr..	3,813,100				Temporarily restricted (January 1)	671,900	Accrued interest receivable		15,800
To Excess of Incomes over expenditure (balancing figures)		3,813,100			Permanently restricted (January 1)	1,274,500	Current pledges receivable (net)		76,500
(Being net surplus transferred to Balance sheet)							Short-term investments		750,400
							Supplies inventory		32,200
							Cash		111,100
						6,441,600			6,441,600