Journal Entries

Prepare the journal entries to record the transactions indicated below, assuming guidance provided under SGAS #34 and #35 is followed.  Next, complete the chart provided for each transaction to show the impact each transaction would ultimately have on equity at the end of the year after all closing entries have been prepared. Write “No D” to the right of the chart if the transaction has no effect on equity.

 

(A)     A donor contributed $4,000,000 in equity securities to be held in perpetuity, with half of the earnings to be spent for the purchase of research equipment for the not-for-profit’s lab facility and the other half of the earnings to be spent on providing the elderly with free flu shots.

 

                             Journal Entry(ies)

Net Asset Account

$ Change

Inc or Dec

NP– ICA

 

 

NP – Rest(NonExpd)

 

 

NP – Rest (Expd)

 

 

NP – UR

 

 

 

 

 

 

(B)     Earnings of $300,000 were received on the endowment described in Transaction (A).

 

                             Journal Entry(ies)

Net Asset Account

$ Change

Inc or Dec

NP – ICA

 

 

NP – Rest(NonExpd)

 

 

NP – Rest (Expd)

 

 

NP – UR

 

 

 

 

 

(C)     The not-for-profit incurred $60,000 in costs related to a special Saturday campaign drive that provided free flu shots to the elderly.

 

                             Journal Entry(ies)

Net Asset Account

$ Change

Inc or Dec

NP – ICA

 

 

NP – Rest(NonExpd)

 

 

NP – Rest (Expd)

 

 

NP – UR

 

 

             

 

 

 


(D)     The not-for-profit purchases $240,000 in research equipment, using the endowment earnings, $25,000 in unrestricted cash, and signing a note for the remainder.   

 

                             Journal Entry(ies)

Net Asset Account

$ Change

Inc or Dec

NP – ICA

 

 

NP – Rest(NonExpd)

 

 

NP– Rest (Expd)

 

 

NP – UR

 

 

 

                            

 

 

(E)      A wealthy citizen donates $100,000 to the not-for-profit with the intent that the money be used in the next fiscal year as the not-for-profit sees fit.

 

                             Journal Entry(ies)

Net Asset Account

$ Change

Inc or Dec

NP – ICA

 

 

NP – Rest(NonExpd)

 

 

NP – Rest (Expd)

 

 

NP – UR

 

 

 

             

 

V. Equity Impact.  (10 Points)

 

Using your journal entry answer for Transaction #6 on the Municipality Journal Entry Problem in Section II of the exam, describe the ultimate equity impact as a result of the transaction.

 

 

 

DSF: FB-Unassigned

GTA-NP-UR                                      ICA

 

 

 

 

 

 

 

 

 

Using your journal entry answer for Transaction #7 on the Municipality Journal Entry Problem in Section II of the exam, describe the ultimate equity impact as a result of the transaction.

ISF NP-UR

GF FB-Unassigned 

WUF NP-UR   

 

GTA    NP-UR

 

BTA     NP-UR   

Answers

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