Question

In: Accounting

The Art League is a not-for-profit organization dedicated to promoting the arts within the community. There...

The Art League is a not-for-profit organization dedicated to promoting the arts within the community. There are two programs conducted by the Art League: (1) exhibition and sales of members’ art (referred to as Exhibition) and (2) Community Art Education. Activities of the Art League are conducted by a part-time administrator, a part-time secretary-bookkeeper, and several part-time volunteers. The volunteers greet visitors, monitor the security of the exhibit hall, and handle the sales of art to the public. Art on exhibit is considered the property of the member artists, not the Art League.

The post-closing trial balance for the Art League as of June 30, 2019, is shown here.

ART LEAGUE
Post-closing Trial Balance
June 30, 2019
Debits Credits
Cash $ 2,910
Short-term Investments 12,411
Grants Receivable 4,900
Prepaid Expense 1,105
Equipment 9,495
Allowance for Depreciation—Equipment $ 2,456
Long-Term Investments—With Donor Restrictions 5,797
Accounts Payable and Accrued Expenses 2,679
Deferred Revenue 3,100
Net Assets Without Donor Restrictions 9,041
Net Assets With Donor Restrictions—Programs 13,545
Net Assets With Donor Restrictions—Permanent Endowment 5,797
Totals $ 36,618 $ 36,618


Following is information summarizing the transactions of the Art League for the year ended June 30, 2020.

  1. During the year, unrestricted cash was received from the following sources: grants determined to be non-exchange transactions, $11,900, of which $4,750 had been reported as receivable on June 30, 2019; annual contributions from fund drives and other unrestricted gifts, $13,891; membership dues, $16,435; tuition and fees for educational workshops, $7,004; and sales of members’ art, $12,040, of which 10 percent represents commissions earned by the Art League.
  2. Interest earnings were as follows: interest on investments without donor restrictions totaled $689; interest on investments restricted for programs totaled $928; interest on investments in the permanent endowment totaled $347 (these investment earnings are restricted for program use).
  3. Grants receivable of $5,080 were recorded at year-end on a grant to complete and deliver a survey of art programs conducted in its county (the grant was determined to be an exchange transaction). Of the $5,080 the Art League had invoiced, $3,150 related to work done this year with the remaining $1,930 to be completed the first part of the new year and thus was reported as deferred revenue at year end.
  4. The Art League receives free rent from the city at an estimated value of $18,300 a year.
  5. Expenses incurred during the year were as follows: salaries and fringe benefits, $47,200; utilities $3,110; printing and postage, $1,340; and miscellaneous, $670. As of year-end, the balances of the following accounts were Prepaid Expenses, $870, and Accounts Payable and Accrued Expenses, $2,791.
  6. During the year, $3,050 of short-term investments were sold, with the proceeds used to purchase two computers and a printer at a cost of $2,865. The resources used were restricted for the purchase of equipment.
  7. In accordance with the terms of the Art League endowment, income earned by the endowment for the provision of free art instruction for children with disabilities was provided at a cost of $855. This amount was allocated to community art education.
  8. Depreciation on equipment in the amount of $1,672 was recorded.
  9. Expenses for the year were allocated 30 percent to Exhibition Program, 20 percent to Community Art Education, 30 percent to Management and General Expenses, and 20 percent to Fund-Raising.
  10. Proceeds of art sales, net of commissions charged by the Art League, totaled $10,836. This amount was paid to member artists during the year.
  11. All nominal accounts were closed at year-end.

Prepare a statement of financial position for the year ended June 30, 2020.

Solutions

Expert Solution

Statement of Financial Position
Assets Amount($) Amount($)
Cash             2,665
Short term Investment     9,361
Grant receivable             5,230
prepaid Expenses 870
Asset restricted
Investment               5,797
Equipment( less depreciation Allowance)             8,232
Total Assest 32,155
Liabilities
Account payable & accrued Expenses             2,791
Deferred revenue               5,030
Total Liability 7,821
Net Asset
Unrestricted 6,244
Temporary Restricted          12,293
Permanently restricted             5,797
Total Liability   24,334
Total Liability + Net Asset          32,155

Workings

Cash   Amnt($) Amnt($)
Opening Balance         2,910
Add- Sl No 1 (11,900+13,891+16,435+7,004+12,040)       61,270
Add- Sl No 2 (689+928+347)         1,964
Less - Sl No 5 [47,200+3,110+1,340+670-(1,105-870)-(2,791-2,679)       51,973
Add- Sl No 6         3,050
Less- Sl No 6         2,865
Less- Sl No 7            855
Less- Sl No 10       10,836
Closing balance (bal. fig.)         2,665
Total       69,194       69,194
Short term Investment   Amnt($) Amnt($)
Opening Balance       12,411
Less- Sl No 6         3,050
Closing balance (bal. fig.) 9,361
Total       12,411       12,411
Grant Receivable Amnt($) Amnt($)
Opening Balance         4,900
Less Sl No 1 4,750
Add- Sl No 3         5,080
Closing balance (bal. fig.) 5,230
Total 9,980 9,980
Pre Paid Expenses Amnt($) Amnt($)
Opening Balance         1,105
Less Sl No 5            235
Closing balance (bal. fig.) 870
Total 1,105         1,105
Equipment Amnt($) Amnt($)
Opening Balance 9,495
Less - Accumulated Depreciation         2,456
Net Balance         7,039
Add - Cash purchase         2,865
Less - Accumulated Depreciation         1,672
Net Balance         8,232
Deferred Revenue Amnt($) Amnt($)
Opening Balance         3,100
add-Sl No 3         1,930
Closing Balance         5,030         5,030
Unrestricted $ Temporary Restrcited-$
Contribution - Unrestricted (Sl No. 1,3&4) [(11,900-4,750+13,891)+3,150+18,300)] 42,491
Membership dues 16,435
Tution fees             7,004
Commission Revenue (12,040*10%)             1,204
Investment Income - unrestricted   689             1,275
Net Asset released from restrcition - Satisfaction purpose (855+1,672)             2,527           -2,527
Total Revenue & other support-A          70,350           -1,252
Expenses (18,300+47,200+3,110+1,340+670+1,672+855)= 73,147
Exhibition Program- 73,147*30%          21,944
Community Art education program- 73,147*30%          21,944
Management & general- 73,147*25%          18,287
Fund Raising - 73,147*15%          10,972
Toatl Expenses-B 73,147
Increase ( Decrease ) in net assets           -1,942           -1,252
Net Asset Opening               9,041          13,545
Ending net Asset             7,099          12,293

Please give me a Thumbs up ?.Thanks!!


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