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______________credit_______________________________23500

Accounts receivable (net) debit_______________45000

Accrued interest receivable debit______________15500

Accumulated depreciation ______credit______________________________________________3250500

Cash___debit__________________________________109000

Contributed services unrestricted____credit____________________________________________25000

Contributed unrestricted____credit____________________________________________________2300000

Contributions temporarily restricted______credit__________________________________________780000

Contributions permanently restricted_____credit__________________________________________2650000

Current pledges receivable (net)______debit_______________75000

Education program expenses____debit___________________1505000

Fund raising expense_____debit________________________116000

Grant revenue temporarily restricted____credit____________________________________________86000

Training seminar expenses___________debit______________4456000

Land, buliding, and equipment___debit___________________5500000

Long term investments___debit_________________________2690000

Management and general expense_____debit______________365000

net assets:

Unrestricted (January 1)______________credit_____________________________________________458000

Temporarily restricted (January 1)_______credit_____________________________________________659000

Permanently restricted (january 1)_______credit_____________________________________________1250000

Net gains on endowment investments unrestricted___credit______________________________________17500

Noncurrent pledge receivables_________debit_______________365000

Program service revenue unrestricted___credit_______________________________________________5592000

postemployment benefits payable____________credit_________________________________________188000

Reclassifications:

Satisfaction of program restrictions____________debit_________250000

Satisfaction of time restrictions________________debit________205000

Satisfaction of program restrictions______credit________________________________________________250000

Satisfaction of time restrictions_________credit_________________________________________________205000

Research program expenses___________debit______________1256000

Short term investments________________debit______________750000

Supplies inventory_______debit___________________________32000

totals______________________________17734500__________________________17734500

a) Prepare closing entries for the year end using separate entries for each net asset classification

b) Prepare a statemnet of activities for the year ended December 31, 2017

c) Prepare a statement of financial position as of December 31 2017

Answer 1

1. Closing entries

Temporarily Restricted Net Assets – Reclassification Out                475000

                        Unrestricted Net Assets – Reclassification In                        475000

To record reclassification of net assets for which the temporary restriction is satisfied

Since no individual transactions are listed, checking account need not be opened.

1. Statement of Activities

Statement of Activities for the year ended 31st December 2015
Particulars	Unrestricted	Temporarily Restricted	Permanently Restricted	Total
REVENUE
Contributions	2,250,500	777,000	2,650,000	5,677,500
Program Fees	5,595,000	-	-	5,595,000
Contributed services	25,000	-	-	25,000
Grants	-	86,000	-	86,000
Net gain on endowment investments	17,500	-	-	17,500
Reclassification when net assets are released from restrictions	475,000	(475,000)	-	-
TOTAL	8,363,000	388,000	2,650,000	11,401,000
LESS: EXPENSES
Education Program Expense	1,505,000	-	-	1,505,000
Fund Raising Expense	116,000	-	-	116,000
Training Seminar Expense	4,456,000	-	-	4,456,000
Management and General Expense	365,000	-	-	365,000
Research Program Expense	1,256,000	-	-	1,256,000
Change in Net Assets	665,000	388,000	2,650,000	3,703,000
Add: Net Assets (Opening)	358,000	759,000	1,250,000	2,367,000
Net Assets (Closing)	1,023,000	1,147,000	3,900,000	6,070,000

1. Statement of Financial Position

Statement of Financial Position as at 31st December 2015
Assets	Amt.	Liabilities & Net Assets	Amt.
Cash	109,000	Net Assets - Closing
Accounts Receivable	75,000	Unrestricted	1,023,000
Accrued Interest Receivable	15,500	Temporarily Restricted	1,147,000
Current Pledges Receivable	45,000	Permanently Restricted	3,900,000
Short term investments	750,000	Accounts Payable	88,000
Supplies inventory	32,000	Accumulated Depreciation	3,300,000
Noncurrent pledge receivables	365,000	Post employment benefits payable	123,500
Land, Building & Equipment	5,500,000
Long Term Investment	2,690,000
	9,581,500		9,581,500