Question

In: Accounting

Following is the trial balance for Prentiss College, a privately funded college, as of January 1,...

Following is the trial balance for Prentiss College, a privately funded college, as of January 1, 2018 (in thousands):

             

Dr

Cr

Cash

$900

Receivables

250

Investments

4,000

Buildings and equipment, net

15,500

Accrued liabilities

$800

Long-term debt

10,000

Unrestricted net assets

4,000

Temporarily restricted net assets

2,000

Permanently restricted net assets

_____

3,850

Total

$20,650

$20,650

Events for 2018 are as follows (in thousands):

             

1. Tuition and fees are $7,000, of which $2,000 is waived for graduate teaching assistantships and $1,000 is covered by scholarships. $3,950 is collected in cash. All tuition and fees relate to 2018.

2. Operating expenses for salaries, utilities, research programs, etc. are $8,500, all paid in cash. Accrued liabilities of $650 were paid in cash. Depreciation on the buildings and equipment is $200.

3. An unrestricted state appropriation of $3,000 is received in cash.

4. Cash donations and gifts for equipment replacement are as follows:

             

Restricted to equipment replacement

$500

Restricted to research projects

300

5. $900 of donor-restricted cash is spent to replace equipment. $100 of donor-restricted cash is spent for research projects (included in Item 2 above).

6. $175 is spent to service the long-term debt ($100 for interest, and $75 for principal; the interest is not included in Item 2 above).

7. Investment income, received in cash, is $2,000, of which $300 is donor-restricted to research programs. Donor-restricted cash used for research programs is $250, included in Item 2 above. Investments have a fair value of $4,200 at year-end. Unrealized gains and losses are unrestricted.

Required:        

a. Prepare journal entries to record the transaction. Indicate whether each entry would affect unrestricted, temporarily restricted, or permanent restricted net assets.

b. Present Prentiss College’s statement of activities for 2018.

c. Present Prentiss College’s statement of financial position as of December 31, 2018.

Solutions

Expert Solution

Journal entries in the books of Prentiss College
Sr No Particulars Debit Credit
1 Cash $     3,950
Teaching Assistantship $     2,000
Scholarship $     1,000
Receivables $          50
     Tuition Fees $     7,000
2 Operating expenses $     8,150
     Cash $     8,150
3 Accrued liabilities $        650
     Cash $        650
4 Depreciation $        200
     Building & Equipment $        200
5 Cash $     3,000
     Unrestricted Net Assets $     3,000
6 Cash $        800
     Permanently Restricted Net Assets $        500
     Temporarily Restricted Net Assets $        300
7 Permanently Restricted Net Assets $        900
     Cash $        900
8 Temporarily Restricted Net Assets $        100
     Cash $        100
9 Interest $        100
Long Term Debt $          75
     Cash $        175
10 Temporarily Restricted Net Assets $        250
     Cash $        250
11 Cash $     2,000
     Income from investments $     1,700
     Temporarily Restricted Net Assets $        300
12 Investment $        200
     Investment Revaluation $        200
Statement of activities of Prentiss College for the year ending on 31 Dec 2018
Income Amount   Expenses Amount  
Tution fees $      7,000 Teaching assistantship $      2,000
Investment revaluation $         200 Operating expenses $      8,150
Income from investment $      1,700 Depreciation $         200
Interest $         100
Deficit $      1,550
Total $    10,450 Total $    10,450
Financial position of Prentiss College as at 31 Dec 2018
Liabilities Amount   Assets Amount  
Permanently Restricted Net Assets $      3,450 Building & Equipment net $    15,300
Temporarily Restricted Net Assets $      2,250 Investments $      4,200
Unrestricted Net Assets (after adjusting deficit) $      4,450 Receivables $         300
Long term debt $      9,925 Cash $         425
Accrued liabilities $         150
Total $    20,225 Total $    20,225

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