Reference no: EM132961115
Question - Make a Wish Foundation began the year with the following balances in their accounts:
Cash $35,000
Accounts Receivable, Net 40,000
Pledges Receivable 331,000
Inventory 20,000
Property, Plant, and Equipment, Net 400,000
Accounts Payable 35,000
Notes Payable 220,000
Wages Payable 34,000
Net Assets with Donor Restrictions 177,000
Net Assets without Donor Restrictions 360,000
The foundation had the following financial events during the current year:
January 10. Received a $250,000 payment from a pledge made last year.
February 16. Placed an order for new furniture for $20,000 with 10-year useful lives. They have not yet made the payment, and the furniture has not been delivered yet.
March 5. Paid out a $25,000 grant to a small non-profit organization. This was a new grant made in the current fiscal year.
May 26. Cut a check for $10,000 towards the deposit for the furniture ordered on February 16th.
June 10. Collected $50,000 in new donations.
Assume they began the year with 200 boxes of inventory, each at a cost of $100 (This is already reflected in the starting inventory balance of $20,000).
September 30. They purchased an additional 225 boxes at a cost of $120 each. They sold 400 boxes for $150 each. They use Last In First Out (LIFO) system of inventory management.
October 7. The furniture ordered on February 16 arrived, and they paid for the balance owed.
November 14. Borrowed $75,000 from the local bank on a note payable.
December 4. Repaid $30,000 on the note payable and also $3,000 in interest expenses.
December 21. Paid its employees $65,000 of wages in cash for the year, $60,000 of which was for the current year and $5,000 of which was for the outstanding balance owed. Employees earned $80,000 in wages for the year.
December 31. Make a Wish purchased the building it operates from for 1 million dollars for an expected life of 20 years. Account for the depreciation on the organization's building for the year.
Required - Make a Wish uses straight-line depreciation method and assumes a 20% salvage value at the end of the life cycle.
a. Record the transactions in a Transactions Worksheet.
b. Prepare the Balance Sheet of the foundation for the two years.
c. Prepare the Activity Statement of the foundation for the year.
d. Prepare the Cash Flow Statement of the foundation for the year using either the Direct Method or the Indirect Method.