Problem 6-12 Journal Entries Start with the Art Museum


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Problem 6-12 Journal Entries Start with the Art Museum Statements of Financial Assets, Liabilities and Net Assets balances at fiscal year-end June 30, 20X1, shown in the Putting It All Together example in Chapter 6, pages 217-222, of “ Today’s Essenetials of Governmental and Not-For-Profit Accounting & Reporting”, 1e, by Susan W. Martin and Elle West. a. Record the following transaction for fiscal year July 1, 20X1, to June 30, 20X2, in journal entries. 1. Admission fees of $850,000 were received. 2. Salaries and wages of $500,000 and $100,000 in fringe benefits were paid. 3. The capital lease payable of $4,000 and mortgage payable of $22,000 payments were made. 4. Utility charges of $28,000 were paid. 5. The Gift Shop ordered and received inventory of $45,000 and had sales of $65,000. Inventory at fiscal year-end was $18,000. 6. The phonathon yielded pledges of $300,000: 50% were paid before fiscal year end. 7. The donor made a donation of $500,000 to be permanently invested with earnings to be used to support general operating activity ($5000 in interest was received during this fiscal year). 8. Accounts payable were paid in full before fiscal year-end. 9. The annual spring reception generated $70,000 in revenue and cost $15,000. 10. Depreciation expense of $50,000 on the museum and $5000 on furniture & fixtures was recorded. 11. Investment income of $108,000 temporarily restricted and $6000 unrestricted was received (in addition to the $5000 mentioned above in item 7). 12. Closing entries were recorded. b. Prepare the basic financial statements for the Art Museum at fiscal year-end June 30, 20X2. Additional financial data to complete the problem is attached or located in the textbook, which I have included in the first paragraph of the problem. Any questions please let me know. Thank you. Financial Statements Problem 6-12.doc b. This statement follows the format illustrated on page 209 and in the Putting it Together example on page 220. (Note the example on page 220 should have classified the net assets.) Art Museum Statement of Financial Position (as of June 30, 20X1 and 20X2) Totals 2002 Assets: Cash Contributions Receivable Investments Gift shop inventory Furniture & fixtures Accumulated Depreciation-furniture & fixtures Museum Building Accumulated Depr.-Museum Land (1,000,000) 100,000 Total Assets $3,816,000 2001 $1,158,000 $628,000 355,000 205,000 1, 600,000 1,100,000 18,000 30,000 100,000 100,000 (15,000) (10,000) 1,500,000 1,500,000 Liabilities and Net Assets: Liabilities: Accounts Payable Capital Lease Payable Mortgage Payable Total Liabilities $ (950,000) 100,000 $2,703,000 129 $10,000 16,000 378,000 404,000 1,422,000 522,000 1,504,000 3,448,000 $3,816,000 Net Assets: Unrestricted Temporarily restricted Permanently restricted Total net assets Total liabilities and net assets 12,000 356,000 368,000 1,031,000 264,000 1,004,000 2,299,000 $2,703,000 130 Chapter 6 Not-for-Profit Accounting and Financial Reporting This statement follows the format as illustrated on page 213 in the American Red Cross that classifies accounts as Unrestricted, Temporarily Restricted, and Permanently Restricted. FASB 117 illustrates some acceptable formats for financial statements. FASB indicated in Statement No. 117 that their illustrated formats are only examples and there are many permissible formats for presentation of the notfor-profit financial statements. Art Museum Statement of Financial Position (as of June 30, 20X1 and 20X2) Temporarily Permanently Unrestricted Restricted Restricted Assets: Cash $1,042,000 Contributions Receivable Investments 45,000 Gift shop inventory 18,000 Furniture & fixtures 100,000 Accumulated Depreciation-furniture & fixtures (15,000) Museum Building 1,500,000 Accumulated Depr.-Museum (1,000,000) Land 100,000 Total Assets $1,790,000 Liabilities and Net Assets: Accounts Payable $ Capital Lease Payable 12,000 Mortgage Payable 356,000 Total Liabilities 368,

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