MUSEUM was incorporated as a not-for-profit organization on January 1, 1985. During the fiscal year ended December 31, 2017, the following summary transactions occurred.
The Museum paid wages and salaries of $1,039,000. Department employees earned the following: programs $865,000, fundraising $50,000, and administration $130,000. The remaining amount was accrued at year-end.
The Museum paid operating expenses of $230,000 for programs, $10,000 for fundraising, and $33,000 for administration. In addition, the Museum paid $3,000 of outstanding accounts payable and $5,000 to obtain inventory. Administrative expenses of $7,000 that were recognized as prepaid expenses in the prior year were consumed.
Property, plant, and equipment was acquired with a note for $20,000.
Depreciation was recognized in the following departments: $175,000 for programs, $5,000 for fundraising, and $30,000 for administration.
Museum admission fees of $505,000 were collected.
A perpetual endowment earned and received interest and dividends of $280,000. The endowment also increased in value $100,000 as of year-end. The donor did not place any time or purpose restrictions of the endowment earnings and the Museum uses historical dollar value to measure the corpus.
A special event that is considered incidental generated $470,000 in gross revenues and had direct costs of $350,000 resulting in net cash of $120,000 received.
A fundraising campaign generated $338,000 in cash gifts and $180,000 in pledges. No purpose restrictions are present, however the pledges will not be collected until next year. $20,000 of the pledges are estimated to be uncollectible.
Pledges made in previous years of $145,000 (with time restrictions due to being a pledge) were collected.
A donor gave $90,000 and required the gift be used on community outreach programs.
The Museum used restricted gifts given in prior years on a program, spending $710,000.
Required
Make all necessary journal entries to record these transactions.
Prepare a statement of activities for the year ended December 31, 2017. Beginning balances of net assets are: Unrestricted $2,002,000; Temporarily Restricted $850,000; and Permanently Restricted $3,000,000.
MUSEUM was incorporated as a not-for-profit organization on January 1, 1985. During the fiscal year ended December 31, 2017, the following summary transactions occurred.
The Museum paid wages and salaries of $1,039,000. Department employees earned the following: programs $865,000, fundraising $50,000, and administration $130,000. The remaining amount was accrued at year-end.
The Museum paid operating expenses of $230,000 for programs, $10,000 for fundraising, and $33,000 for administration. In addition, the Museum paid $3,000 of outstanding accounts payable and $5,000 to obtain inventory. Administrative expenses of $7,000 that were recognized as prepaid expenses in the prior year were consumed.
Property, plant, and equipment was acquired with a note for $20,000.
Depreciation was recognized in the following departments: $175,000 for programs, $5,000 for fundraising, and $30,000 for administration.
Museum admission fees of $505,000 were collected.
A perpetual endowment earned and received interest and dividends of $280,000. The endowment also increased in value $100,000 as of year-end. The donor did not place any time or purpose restrictions of the endowment earnings and the Museum uses historical dollar value to measure the corpus.
A special event that is considered incidental generated $470,000 in gross revenues and had direct costs of $350,000 resulting in net cash of $120,000 received.
A fundraising campaign generated $338,000 in cash gifts and $180,000 in pledges. No purpose restrictions are present, however the pledges will not be collected until next year. $20,000 of the pledges are estimated to be uncollectible.
Pledges made in previous years of $145,000 (with time restrictions due to being a pledge) were collected.
A donor gave $90,000 and required the gift be used on community outreach programs.
The Museum used restricted gifts given in prior years on a program, spending $710,000.
Required
Make all necessary journal entries to record these transactions.
Prepare a statement of activities for the year ended December 31, 2017. Beginning balances of net assets are: Unrestricted $2,002,000; Temporarily Restricted $850,000; and Permanently Restricted $3,000,000.
Related questions
Tim Ltd acquired all the issued capital of Tam Ltd on 1 July 2012 for $3,020,000. At that date the shareholdersâ equity of Tam Ltd was:
| $ | |
| Share Capital | 2,200,000 |
| Retained Earnings | 640,000 |
Additional information for the year ended 30 June 2014:
(1) Intercompany sales:
(a) Tim Ltd to Tam Ltd $42,000
(b) Tam Ltd to Tim Ltd $36,000
(2) Unrealised profits in closing inventory as at 30 June 2014 is $2,400 for goods sold by Tam Ltd to Tim Ltd and $4,800 for goods sold by Tim Ltd to Tam Ltd.
(3) Unrealised profit in opening inventory for goods sold by Tim Ltd to Tam Ltd as at 1 July 2013 is $2,800 and for goods sold by Tam Ltd to Tim Ltd is $4,200.
(4) Tim Ltd employees provide administration support to Tam Ltd. For these services, Tam Ltd pays an annual fee of $20,000 per annum.
(5) The final dividend of $33,000 declared as at 30 June 2013, was paid by Tam
Ltd in October 2013. An interim dividend was paid in January $28,000. A
final dividend was declared at 30 June, 2014 $40,000.
(6) On 30 June 2014, Tim Ltd purchased a motor vehicle from Tam Ltd for
$30,000. Tam Ltd made profit on this sale of $7,000.
(7) Tam Ltd raised funds from Tim Ltd by issuing $200,000, 8% Debentures on
1 July 2013. The annual interest charge was paid by Tam Ltd 30 June 2014.
(8) The directors review the balance of goodwill each year. They agree that:
(a) For the year ended 30 June 2013, goodwill was impaired by $10,000.
(b) For the year ended 30 June 2014, goodwill is to be impaired by
$40,000. Trial balance of Tim Ltd and Tam Ltd is attached for your information
Required:
Prepare the appropriate consolidated journal entries for 30 June 2014 to record the following transactions in the worksheet provided:
Trial Balance for Tim Ltd & Tam Ltd: 30 June 2014
| Tim Ltd | Tam Ltd | Eliminations | Consolidation | ||
| Sales | 2,970,000 | 1,650,000 | |||
| Less: Cost of Sales | |||||
| Inventory 01/07/2013 | 240,000 | 104,000 | |||
| Purchases | 1,250,000 | 626,000 | |||
| 1,490,000 | 730,000 | ||||
| Inventory 30/06/2014 | 230,000 | 98,000 | |||
| Cost of Goods Sold | 1,260,000 | 632,000 | |||
| Gross Profit | 1,710,000 | 1,018,000 | |||
| Administration support fees | 20,000 | 0 | |||
| Gain on Sale of Plant | 0 | 7,000 | |||
| Dividends Received | 61,000 | 0 | |||
| Interest Received on Debentures | 16,000 | 0 | |||
| 1,807,000 | 1,025,000 | ||||
| Less: Expenses - Selling Exp. | 160,000 | 71,000 | |||
| - Admin Exp. - Financial Exp. | 583,000 104,000 847,000 | 628,000 16,000 715,000 | |||
| Operating Profit before Tax | 960,000 | 310,000 | |||
| Less: Tax expense | 288,000 | 93,000 | |||
| Profit after Tax | 672,000 | 217,000 | |||
| Retained Earnings 01/07/2013 | 1,176,000 | 843,000 | |||
| Available for Appropriation | 1,848,000 | 1,060,000 | |||
| Appropriations | |||||
| Interim dividend paid | 160,000 | 28,000 | |||
| Final dividend declared | 280,000 | 40,000 | |||
| Total Appropriations | 440,000 | 68,000 | |||
| Retained Earnings 30/06/2014 | 1,408,000 | 992,000 | |||
| Share Capital | 4,000,000 | 2,200,000 | |||
| 8% Debentures | 0 | 200,000 | |||
| Accounts Payable | 144,000 | 72,000 | |||
| Final Dividends Payable | 280,000 | 40,000 | |||
| Taxation Payable | 188,000 | 50,000 | |||
| 6,020,000 | 3,554,000 | ||||
| Property, Plant & Equip (net) | 1,464,000 | 1,800,000 | |||
| Shares in Tam Ltd | 3,020,000 | 0 | |||
| 8% Debentures | 200,000 | 0 | |||
| Other Non-Current Assets | 650,000 | 1,300,000 | |||
| Inventory | 230,000 | 98,000 | |||
| Other Current Assets | 456,000 | 356,000 | |||
| Goodwill on Consolidation | |||||
| 6,020,000 | 3,554,000 | ||||
Please use the following format
| General Journal | |||
Consolidated worksheet for Tim Ltd & Tam Ltd as at 30 June 2014
| Tim Ltd | Tam Ltd | Eliminations | Consolidation | ||
| Sales | 2,970,000 | 1,650,000 | |||
| Less: Cost of Sales | |||||
| Inventory 01/07/2013 | 240,000 | 104,000 | |||
| Purchases | 1,250,000 | 626,000 | |||
| 1,490,000 | 730,000 | ||||
| Inventory 30/06/2014 | 230,000 | 98,000 | |||
| Cost of Goods Sold | 1,260,000 | 632,000 | |||
| Gross Profit | 1,710,000 | 1,018,000 | |||
| Administration support fees | 20,000 | 0 | |||
| Gain on Sale of Plant | 0 | 7,000 | |||
| Dividends Received | 61,000 | 0 | |||
| Interest Received from Tam ltd | 16,000 | 0 | |||
| 1,807,000 | 1,025,000 | ||||
| Less: Expenses - Selling Exp. | 160,000 | 71,000 | |||
| - Admin Exp. | 583,000 | 628,000 | |||
| - Financial Exp. | 104,000 | 16,000 | |||
| 847,000 | 715,000 | ||||
| Operating Profit before Tax | 960,000 | 310,000 | |||
| Less: Tax expense | 288,000 | 93,000 | |||
| Profit after Tax | 672,000 | 217,000 | |||
| Retained Earnings 01/07/2013 | 1,176,000 | 843,000 | |||
| Available for Appropriation | 1,848,000 | 1,060,000 | |||
| Appropriations | |||||
| Interim Dividend paid | 160,000 | 28,000 | |||
| Final Dividend declared | 280,000 | 40,000 | |||
| Total Appropriations | 440,000 | 68,000 | |||
| Retained Earnings 30/06/2014 | 1,408,000 | 992,000 | |||
| Share Capital | 4,000,000 | 2,200,000 | |||
| 8% Debentures | 0 | 200,000 | |||
| Accounts Payable | 144,000 | 72,000 | |||
| Final Dividends Payable | 280,000 | 40,000 | |||
| Taxation Payable | 188,000 | 50,000 | |||
| 6,020,000 | 3,554,000 | ||||
| Property, Plant & Equip (net) | 1,464,000 | 1,800,000 | |||
| Shares in Tam Ltd | 3,020,000 | 0 | |||
| 8% Debentures in Tam | 200,000 | 0 | |||
| Other Non-Current Assets | 650,000 | 1,300,000 | |||
| Inventory | 230,000 | 98,000 | |||
| Other Current Assets | 456,000 | 356,000 | |||
| Goodwill on Consolidation | |||||
| 6,020,000 | 3,554,000 | ||||
Tim Ltd acquired all the issued capital of Tam Ltd on 1 July 2012 for $3,020,000. At that date the shareholdersâ equity of Tam Ltd was:
| $ | |
| Share Capital | 2,200,000 |
| Retained Earnings | 640,000 |
Additional information for the year ended 30 June 2014:
(1) Intercompany sales:
(a) Tim Ltd to Tam Ltd $42,000
(b) Tam Ltd to Tim Ltd $36,000
(2) Unrealised profits in closing inventory as at 30 June 2014 is $2,400 for goods sold by Tam Ltd to Tim Ltd and $4,800 for goods sold by Tim Ltd to Tam Ltd.
(3) Unrealised profit in opening inventory for goods sold by Tim Ltd to Tam Ltd as at 1 July 2013 is $2,800 and for goods sold by Tam Ltd to Tim Ltd is $4,200.
(4) Tim Ltd employees provide administration support to Tam Ltd. For these services, Tam Ltd pays an annual fee of $20,000 per annum.
(5) The final dividend of $33,000 declared as at 30 June 2013, was paid by Tam
Ltd in October 2013. An interim dividend was paid in January $28,000. A
final dividend was declared at 30 June, 2014 $40,000.
(6) On 30 June 2014, Tim Ltd purchased a motor vehicle from Tam Ltd for
$30,000. Tam Ltd made profit on this sale of $7,000.
(7) Tam Ltd raised funds from Tim Ltd by issuing $200,000, 8% Debentures on
1 July 2013. The annual interest charge was paid by Tam Ltd 30 June 2014.
(8) The directors review the balance of goodwill each year. They agree that:
(a) For the year ended 30 June 2013, goodwill was impaired by $10,000.
(b) For the year ended 30 June 2014, goodwill is to be impaired by
$40,000. Trial balance of Tim Ltd and Tam Ltd is attached for your information
Required:
Prepare the appropriate consolidated journal entries for 30 June 2014 to record the following transactions in the worksheet provided:
Trial Balance for Tim Ltd & Tam Ltd: 30 June 2014
| Tim Ltd | Tam Ltd | Eliminations | Consolidation | ||
| Sales | 2,970,000 | 1,650,000 | |||
| Less: Cost of Sales | |||||
| Inventory 01/07/2013 | 240,000 | 104,000 | |||
| Purchases | 1,250,000 | 626,000 | |||
| 1,490,000 | 730,000 | ||||
| Inventory 30/06/2014 | 230,000 | 98,000 | |||
| Cost of Goods Sold | 1,260,000 | 632,000 | |||
| Gross Profit | 1,710,000 | 1,018,000 | |||
| Administration support fees | 20,000 | 0 | |||
| Gain on Sale of Plant | 0 | 7,000 | |||
| Dividends Received | 61,000 | 0 | |||
| Interest Received on Debentures | 16,000 | 0 | |||
| 1,807,000 | 1,025,000 | ||||
| Less: Expenses - Selling Exp. | 160,000 | 71,000 | |||
| - Admin Exp. - Financial Exp. | 583,000 104,000 847,000 | 628,000 16,000 715,000 | |||
| Operating Profit before Tax | 960,000 | 310,000 | |||
| Less: Tax expense | 288,000 | 93,000 | |||
| Profit after Tax | 672,000 | 217,000 | |||
| Retained Earnings 01/07/2013 | 1,176,000 | 843,000 | |||
| Available for Appropriation | 1,848,000 | 1,060,000 | |||
| Appropriations | |||||
| Interim dividend paid | 160,000 | 28,000 | |||
| Final dividend declared | 280,000 | 40,000 | |||
| Total Appropriations | 440,000 | 68,000 | |||
| Retained Earnings 30/06/2014 | 1,408,000 | 992,000 | |||
| Share Capital | 4,000,000 | 2,200,000 | |||
| 8% Debentures | 0 | 200,000 | |||
| Accounts Payable | 144,000 | 72,000 | |||
| Final Dividends Payable | 280,000 | 40,000 | |||
| Taxation Payable | 188,000 | 50,000 | |||
| 6,020,000 | 3,554,000 | ||||
| Property, Plant & Equip (net) | 1,464,000 | 1,800,000 | |||
| Shares in Tam Ltd | 3,020,000 | 0 | |||
| 8% Debentures | 200,000 | 0 | |||
| Other Non-Current Assets | 650,000 | 1,300,000 | |||
| Inventory | 230,000 | 98,000 | |||
| Other Current Assets | 456,000 | 356,000 | |||
| Goodwill on Consolidation | |||||
| 6,020,000 | 3,554,000 | ||||
Use the following format:
Tim & Tam Ltd
| General Journal | |||
Consolidated worksheet for Tim Ltd & Tam Ltd as at 30 June 2014
| Tim Ltd | Tam Ltd | Eliminations | Consolidation | ||
| Sales | 2,970,000 | 1,650,000 | |||
| Less: Cost of Sales | |||||
| Inventory 01/07/2013 | 240,000 | 104,000 | |||
| Purchases | 1,250,000 | 626,000 | |||
| 1,490,000 | 730,000 | ||||
| Inventory 30/06/2014 | 230,000 | 98,000 | |||
| Cost of Goods Sold | 1,260,000 | 632,000 | |||
| Gross Profit | 1,710,000 | 1,018,000 | |||
| Administration support fees | 20,000 | 0 | |||
| Gain on Sale of Plant | 0 | 7,000 | |||
| Dividends Received | 61,000 | 0 | |||
| Interest Received from Tam ltd | 16,000 | 0 | |||
| 1,807,000 | 1,025,000 | ||||
| Less: Expenses - Selling Exp. | 160,000 | 71,000 | |||
| - Admin Exp. | 583,000 | 628,000 | |||
| - Financial Exp. | 104,000 | 16,000 | |||
| 847,000 | 715,000 | ||||
| Operating Profit before Tax | 960,000 | 310,000 | |||
| Less: Tax expense | 288,000 | 93,000 | |||
| Profit after Tax | 672,000 | 217,000 | |||
| Retained Earnings 01/07/2013 | 1,176,000 | 843,000 | |||
| Available for Appropriation | 1,848,000 | 1,060,000 | |||
| Appropriations | |||||
| Interim Dividend paid | 160,000 | 28,000 | |||
| Final Dividend declared | 280,000 | 40,000 | |||
| Total Appropriations | 440,000 | 68,000 | |||
| Retained Earnings 30/06/2014 | 1,408,000 | 992,000 | |||
| Share Capital | 4,000,000 | 2,200,000 | |||
| 8% Debentures | 0 | 200,000 | |||
| Accounts Payable | 144,000 | 72,000 | |||
| Final Dividends Payable | 280,000 | 40,000 | |||
| Taxation Payable | 188,000 | 50,000 | |||
| 6,020,000 | 3,554,000 | ||||
| Property, Plant & Equip (net) | 1,464,000 | 1,800,000 | |||
| Shares in Tam Ltd | 3,020,000 | 0 | |||
| 8% Debentures in Tam | 200,000 | 0 | |||
| Other Non-Current Assets | 650,000 | 1,300,000 | |||
| Inventory | 230,000 | 98,000 | |||
| Other Current Assets | 456,000 | 356,000 | |||
| Goodwill on Consolidation | |||||
| 6,020,000 | 3,554,000 | ||||
| The City of Pfeiffer starts the year of 2015 with the General Fund and an enterprise fund. The General Fund has two activities: education and parks/recreation. For convenience, assume that the General Fund holds $123,000 cash and a new school building costing $1 million. The city utilizes straight-line depreciation. The building has a 20-year life and no salvage value. The enterprise fund has $62,000 cash and a new $600,000 civic auditorium with a 30-year life and no salvage value. The enterprise fund monitors just one activity, the rental of the civic auditorium for entertainment and other cultural affairs. |
| The following transactions for the city take place during 2015. Assume that the cityâs fiscal year ends on December 31. |
| a. | Decides to build a municipal park and transfers $70,000 into a capital projects fund and immediately expends $20,000 for a piece of land. The creation of this fund and this transfer were made by the highest level of government authority. |
| b. | Borrows $110,000 cash on a long-term bond for use in creating the new municipal park. |
| c. | Assesses property taxes on the first day of the year. The assessment, which is immediately enforceable, totals $600,000. Of this amount, $510,000 will be collected during 2015 and another $50,000 is expected in the first month of 2016. The remainder is expected about halfway through 2016. |
| d. | Constructs a building in the park in (b) for $80,000 cash so that local citizens can play basketball and other sports. It is put into service on July 1 and should last 10 years with no salvage value. |
| e. | Builds a sidewalk around the new park for $10,000 cash and puts it into service on July 1. It should last for 10 years, but the city plans to keep it up to a predetermined quality level so that it will last almost indefinitely. |
| f. | Opens the park and charges an entrance fee of only a token amount so that it records the park, therefore, in the General Fund. Collections during this first year total $8,000. |
| g. | Buys a new parking deck for $200,000, paying $20,000 cash and signing a long-term note for the rest. The parking deck, which is to go into operation on July 1, is across the street from the civic auditorium and is considered part of that activity. It has a 20-year life and no salvage value. |
| h. | Receives a $100,000 cash grant for the city school system that must be spent for school lunches for the poor. Appropriate spending of these funds is viewed as an eligibility requirement of this grant. During the current year, $37,000 of the amount received was properly spent. |
| i. | Charges students in the school system a total fee of $6,000 for books and the like. Of this amount, 90 percent is collected during 2015 with the remainder expected to be collected in the first few weeks of 2016. |
| j. | Buys school supplies for $22,000 cash and uses $17,000 of them. The General Fund uses the purchases method. |
| k. | Receives a painting by a local artist to be displayed in the local school. It qualifies as a work of art, and officials have chosen not to capitalize it. The painting has a value of $80,000. It is viewed as inexhaustible. |
| l. | Transfers $20,000 cash from the General Fund to the Enterprise Fund as a capital contribution. |
| m. | Orders a school bus for $99,000. |
| n. | Receives the school bus and pays an actual cost of $102,000. The bus is put into operation on October 1 and should last for five years with no salvage value. |
| o. | Pays salaries of $240,000 to school teachers. In addition, owes and will pay $30,000 during the first two weeks of 2016. Vacations worth $23,000 have also been earned but will not be taken until July 2016. |
| p. | Pays salaries of $42,000 to city auditorium workers. In addition, owes and will pay $3,000 in the first two weeks of 2016. Vacations worth $5,000 have also been earned but will not be taken until July 2016. |
| q. | Charges customers $130,000 for the rental of the civic auditorium. Of this balance, collected $110,000 in cash and will collect the remainder in April 2016. |
| r. | Pays $9,000 maintenance charges for the building and sidewalk in (d) and (e). |
| s. | Pays $14,000 on the bond in (b) on the last day of 2015: $5,000 principal and $9,000 interest. |
| t. | Accrues interest of $13,000 on the note in (g) as of the end of 2015, an amount that it will |
| u. | Assumes that a museum that operates within the city is a component unit that will be discretely presented. The museum reports to city officials that it had $42,000 of direct expenses this past year and $50,000 in revenues from admission charges. The only assets that it had at year-end were cash of $24,000, building (net of depreciation) of $300,000, and a long-term liability of $210,000. |
| Prepare the 2015 fund financial statements for the governmental funds and the proprietary funds. A statement of cash flows is not required. Assume that âavailableâ is defined as within 60 days and that all funds are major. The General Fund is used for debt repayment. Assume that major funds are labeled as âSpecial Revenue Fundâ and âCapital Projects Fundâ. (Amounts to be deducted should be indicated by a minus sign.) |
