The Watson Foundation, a private not-for-profit entity, starts 2015 with cash of
ID: 2579422 • Letter: T
Question
The Watson Foundation, a private not-for-profit entity, starts 2015 with cash of $100,000; contributions receivable (net) of $200,000; investments of $300,000; and land, buildings, and equipment of $200,000. In addition, its unrestricted net assets were $400,000, temporarily restricted net assets were $100,000, and permanently restricted net assets were $300,000. Of the temporarily restricted net assets, 50 percent must be used to help pay for a new building; the remainder is restricted for salaries. No implied time restriction was designated for the building when purchased. For the permanently restricted net assets, all income is unrestricted.
Received a cash gift of $12,000 that the entity must convey to another charity. However, Watson has the right to give the money to a different organization if it so chooses.
Paid $15,000 in interest on the note signed to acquire the building.
A.) Prepare a Statement of Activities for this entity for this year
B.)
Prepare a statement of financial position for this organization at the end of this year.
The Watson Foundation, a private not-for-profit entity, starts 2015 with cash of $100,000; contributions receivable (net) of $200,000; investments of $300,000; and land, buildings, and equipment of $200,000. In addition, its unrestricted net assets were $400,000, temporarily restricted net assets were $100,000, and permanently restricted net assets were $300,000. Of the temporarily restricted net assets, 50 percent must be used to help pay for a new building; the remainder is restricted for salaries. No implied time restriction was designated for the building when purchased. For the permanently restricted net assets, all income is unrestricted.
Explanation / Answer
Answer:
1
WATSON ORGANIZATION
STATEMENT OF ACTIVITIES
For Year Ending December 31
Temporarily
Permanently
Unrestricted
Restricted
Restricted
Net Assets
Net Assets
Net Assets
Contributions revenue
180000
161000
Contributions -- interest revenue 20,000
6000
Investment revenue
30000
Membership revenue
30000
_______
________
Total revenues
260000
167000
Net assets released from
restriction
65000
-65000
________
Total revenues and net assets
released from restriction
325000
102000
________
Expenses:
General and administrative
—Rent
-12000
—Salary
-90000
—Advertising
-15000
—Utilities
-16000
—Depreciation
-40000
—Interest
-15000
Total expenses
-188000
Excess of total revenues and net
assets released from restriction
over expenses
137000
102000
-0-
Net assets at beginning of year
400000
100000
300000
Net assets at end of year
537000
202000
300000
__________________________________
2
WATSON ORGANIZATION
STATEMENT OF FINANCIAL POSITION
ASSETS
Cash
254000
Pledges receivable (net)
275000
Investments
300000
Land, buildings, and equipment (net)
660000
Total assets
1489000
LIABILITIES
Notes payable
450000
NET ASSETS
- Unrestricted
537000
- Temporarily restricted
202000
- Permanently restricted
300000
1039000
WATSON ORGANIZATION
STATEMENT OF ACTIVITIES
For Year Ending December 31
Temporarily
Permanently
Unrestricted
Restricted
Restricted
Net Assets
Net Assets
Net Assets
Contributions revenue
180000
161000
Contributions -- interest revenue 20,000
6000
Investment revenue
30000
Membership revenue
30000
_______
________
Total revenues
260000
167000
Net assets released from
restriction
65000
-65000
________
Total revenues and net assets
released from restriction
325000
102000
________
Expenses:
General and administrative
—Rent
-12000
—Salary
-90000
—Advertising
-15000
—Utilities
-16000
—Depreciation
-40000
—Interest
-15000
Total expenses
-188000
Excess of total revenues and net
assets released from restriction
over expenses
137000
102000
-0-
Net assets at beginning of year
400000
100000
300000
Net assets at end of year
537000
202000
300000
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