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Prepare the Closing Entries necessary to close out the Statement of Activities NOTE: Each general ledger...

Prepare the Closing Entries necessary to close out the Statement of Activities

NOTE: Each general ledger account from the Statement of Activities gets closed out to one of two accounts: Either a) Net Assets With Donor Restrictions OR b) Net Assets WITHOUT Donor Restrictions.

These are both balance sheet accounts.

Transaction 1: The DONOR gives you $2,000 cash to use for scholarships

Transaction 2: The DONOR given you $1,000 and you can use it for any programs

Transaction 3: The NFP pays out $2,000 for scholarship expenses

Journal Entry: DEBITS CREDITS

Cash $2,000

Contribution (Restricted by Donor) $2,000 (needs to be closed)

Cash $1,000

Contribution (Not Restricted) $1,000 (needs to be closed)

Net Assets Released-Donor Restriction $2,000 (needs to be closed)

Net Assets Released-Without Donor Restriction $2,000 (needs to be closed)

Expenses-Scholarships $2,000 (needs to be closed)

Cash $2,000

Statement of Activities (dollars are in CREDITS)

For the Year Ended 2019 CONTRIBUTIONS CONTRIBUTIONS

Unrestricted Restricted By Donor

Contributions (not restricted) $1,000

Contributions (restricted) $2,000

Net Assets Released-Donor Restrictions ($2,000)

Net Assets Released-Without Donor Restrictions $2,000

Expenses ($2,000)

CHANGE IN ACTIVITIES FOR THE YEAR: $1,000 -0- $1,000 total

Balance Sheet As of December 31, 2019

Cash $1,000

Net Assets without Donor Unrestricted $1,000

Expert Solution

Answer: The closing Journal entries to close out the Statement of activities are prepared as follows:

Journal	Debit ($)	Credit ($)
Contribution (Restricted by Donor) Net assets with donor restrictions	2,000	2,000
Contribution (Not Restricted by Donor) Net assets without donor restrictions	1,000	1,000
Net assets with donor restrictions Net asset released- Donor restrictions	2,000	2,000
Net asset released- without Donor restrictions Net assets without donor restrictions	2,000	2,000
Net assets without donor restrictions Expense- Scholarships	2,000	2,000

ekkarill92 answered 2 years ago

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