ACG 3501 Not-for-Profit Activity
The purpose of this project is to reinforce the financial accounting and reporting concepts applicable to not-for-profit organizations. This assignment will allow students an opportunity to use critical thinking skills to evaluate and then record a number of typical transactions, adjustments, and reclassifications encountered by not-for-profit organizations .
Use an Excel spreadsheet to prepare a working trial balance to summarize the unadjusted amounts, adjustments, and final balance amounts (see additional instructions below). All journal entries posted to the trial balance are to be listed below the trial balance, adequately described, and all supporting calculations shown below the applicable journal entry.
Organizing the information in this manner will allow you to answer the questions noted under the “Quizzes” tab for “Not-for-Profit Activity”. You will be able to complete your work much more efficiently if you thoroughly review the questions you are required to answer before attempting to analyze the following information.
Submission of your Excel spreadsheet is a required part of this assignment and is worth 50 points. The remaining 100 points for this assignment are related to the questions (located under the “Quizzes” tab) that you will need to answer using your completed adjusted trial balance and the background information provided here. In order to receive the 50 points for your spreadsheet, you will need to attach it and then submit it via the “Assignments” tab in Webcourses.
Guidelines for the preparation of your Excel spreadsheet are as follows:
• Use only one “sheet” for your work.
• Your name and ACG 3501 section number should appear at the top of the spreadsheet.
• Order your journal entries in the same order as the background information is presented. Indicate the question number(s) from the “quiz” on your spreadsheet next to the related amount or work.
• Prepare any adjustments needed based on the situations noted below. Journal entries should be in good form (i.e. balanced, debit and credit amounts clearly delineated, no abbreviations, brief description of the entry, etc.). Post any adjusting entries to the trial balance and extend the adjusted amounts. In cases where multiple entries are necessary for the same account, you must clearly indicate somewhere in this assignment the detail amounts comprising the total amount(s) indicated on the trial balance.
• Prepare year end reclassification entries based on the situations noted. Entries should be in good form (i.e. balanced, debit and credit amounts clearly delineated, no abbreviations, brief description of the entry, etc.). Post any reclassifying entries to the trial balance and extend the reclassified amounts. In cases where multiple entries are necessary for the same account, you must clearly indicate somewhere in this assignment1 the detail amounts comprising any aggregated amount indicated on the trial balance.
• Clearly label all columns and rows and show ALL of your work. Please avoid using abbreviations that are not generally accepted in the accounting vernacular.
• Enable the spreadsheet to allow the instructor to view the formulae used in each cell.
• Use commas for all numbers but do not use decimals or places (i.e. one thousand ten dollars and 20 cents should show as 1,010 not $1,010.20).
The information on your spreadsheet will be critical to your ultimate success on this activity. In addition, the spreadsheet information will be used to determine if any partial credit should be awarded for questions that are missed on the “quiz”. Therefore it is very important that you make the information on your spreadsheet easy for someone not familiar with how your brain thinks to follow the work and easily find your answers.
1. Review each of the following items that were noted by the CFO after the unadjusted trial balance was prepared and make adjusting and reclassifying entries as necessary. Do not assume that all items listed require adjustments or reclassifications.
a. $2,000 was charged to occupancy and utility expense that represented a rental deposit for a three-year operating lease of a new copier.
b. Depreciation expense recorded for the year was incorrect. The correct amount of depreciation should have been $50,000.
c. Ending inventory included $3,500 for brochures related to the planned giving campaign scheduled to begin September 1, 2014.
d. Service Fees – Daycare included $5,500 related to childcare services for the week beginning July 1, 2014.
e. Printing and publishing expense included $1,000 for check stock (i.e. special watermarked paper for printing operating and payroll checks) that was received June 29, 2014. A review of all charges to this account indicated 55% of the charges related to the Fundraising function and the remaining 45% were related to the Administrative function.
f. A review of all charges to Contract Computer Services indicated 50% of the charges related to the Center’s child care programs, 15% related to maintaining the Center’s donor data base, and the remaining 35% related to the Administrative function.
g. Unrestricted contributions revenue included $25,000 that, based on a letter dated March 1, 2014 from the donor, is to be used for a new after school reading program. The after school care program director plans to begin this new program with the start of the new school year in August of 2014.
h. The fair value of unrestricted investments increased $18,000.
2. Two weeks after fiscal year end, a major donor with an outstanding unrestricted pledge of $4,000 filed for Chapter 7 bankruptcy. Remember that all bad debt write offs for uncollectible pledges are considered fundraising expenses.
3. Occupancy and related costs are charged to functions based on the relative square footage used for each program/function. Building space is utilized as follows:
After school care services 1,750 square feet
Preschool 2,250 square feet
Preschool daycare 2,000 square feet
Parent training classes 1,500 square feet
Administration 1,750 square feet
Executive 750 square feet
4. All program related expenses, unless otherwise noted, are incurred by each program in proportion to the related program revenues.
5. Following is a list of salaries and fringe benefits incurred by programs and functions. The CFO studied time records and talked to employees to determine how employees spent their time.
After school care services 10 staff 100% program $ 225,000
Preschool 4 staff 100% program 180,000
Preschool daycare 10 staff 100% program 190,000
Parent training classes 1 staff 100% program 5,000
Administration 4 staff 2% fundraising 160,000
Executive 2 staff 5% fundraising 220,000