Reference no: EM131785415
Assignment
The Art League is a not-for-profit organization dedicated to promoting the arts within the community. There are two programs conducted by the Art League: (1) exhibition and sales of members' art (referred to as Exhibition) and (2) Community Art Education. Activities of the Art League are conducted by a part-time administrator, a part-time secretary-bookkeeper, and several part-time volunteers. The volunteers greet visitors, monitor the security of the exhibit hall, and handle the sales of art to the public. Art on exhibit is considered the property of the member artists, not the Art League.
The post-closing trial balance for the Art League as of June 30, 2016, is shown here.
|
ART LEAGUE
|
|
Post-closing Trial Balance
|
|
June 30, 2016
|
|
|
Debits
|
Credits
|
|
Cash
|
3,015
|
|
|
Short-term Investments
|
12,111
|
|
|
Grants Receivable
|
4,600
|
|
|
Prepaid Expense
|
1,060
|
|
|
Equipment
|
9,345
|
|
|
Allowance for Depreciation-Equipment
|
|
2,426
|
|
Long-term Investments-Permanently Restricted
|
5,767
|
|
|
Accounts Payable and Accrued Expenses
|
|
2,649
|
|
Deferred Revenue
|
|
2,800
|
|
Unrestricted Net Assets
|
|
9,011
|
|
Temporarily Restricted Net Assets
|
|
13,245
|
|
Permanently Restricted Net Assets
|
|
5,767
|
|
|
|
|
|
Totals
|
35,898
|
35,898
|
Following is information summarizing the transactions of the Art League for the year ended June 30, 2017.
1. During the year, unrestricted cash was received from the following sources: grants, $11,600, of which $4,600 had been reported as receivable on June 30, 2016; annual contributions from fund drives and other unrestricted gifts, $13,861; membership dues, $16,285; tuition and fees for educational workshops, $6,974; and sales of members' art, $12,010, of which 20 percent represents commissions earned by the Art League.
2. Interest earnings were as follows: interest on unrestricted investments totaled $686; interest on temporarily restricted investments totaled $925; interest on permanently restricted investments totaled $344 (these investment earnings are temporarily restricted for program use).
3. Grants receivable as of year-end totaled $5,020, of which $3,120 was earned in the current year (thus unrestricted) and $1,900 was reported as deferred revenue.
4. The Art League receives free rent from the city at an estimated value of $18,000 a year.
5. Expenses incurred during the year were as follows: salaries and fringe benefits, $46,900; utilities $3,080; postage and supplies, $1,310; and miscellaneous, $640. As of year-end, the balances of the following accounts were: Prepaid Expenses, $840; Accounts Payable and Accrued Expenses, $2,746.
6. During the year, $2,900 of short-term investments were sold, with the proceeds used to purchase two computers and printer at a cost of $2,835. The resources used were temporarily restricted for the purchase of equipment.
7. In accordance with the terms of the Art League endowment, income earned by the endowment for the provision of free art instruction for handicapped children was provided at a cost of $825. This amount was allocated to community art education.
8. Depreciation on equipment in the amount of $1,642 was recorded.
9. Expenses for the year were allocated 30 percent to Exhibition Program, 30 percent to Community Art Education, 25 percent to Management and General Expenses, and 15 percent to Fund-Raising.
10. Proceeds of art sales, net of commissions charged by the Art League, totaled $9,608. This amount was paid to member artists during the year.
11. All nominal accounts were closed at year-end.
Required
a. Prepare journal entries to record these transactions. Expense transactions should be initially recorded by object classification, unless otherwise instructed; in entry 9, expenses will be allocated to functions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)
1.Record the unrestricted cash received during the year.
2.Record the interest on investment income received during the year.
3.Grants receivable as of year-end totaled $5,020, of which $3,120 was earned in the current year (thus unrestricted) and $1,900 was reported as deferred revenue.
4.The Art League receives free rent from the city at an estimated value of $18,000 a year.
5.Record the expenses incurred during the year.
6.Record the sale of short-term investments made during the year.
7.Record the purchase of equipment.
8.Record the payment made for free art education.
9.Record the necessary adjustment in the net assets account.
10.Record the depreciation on equipment.
11.Record the necessary adjustment in the net assets account.
12.Expenses for the year were allocated 30 percent to Exhibition Program, 30 percent to Community Art Education, 25 percent to Management and General Expenses, and 15 percent to Fund-Raising.
13.Proceeds of art sales, net of commissions charged by the Art League, totaled $9,608. This amount was paid to member artists during the year.
14.Record the closure of all nominal accounts at year end.
15.Record the transfer of investment income at the year end.
16.Record the transfer to the temporarily restricted account.
17.Record the transfer to the unrestricted accounts.