Prepare a Statement of Activities for the period ended December 31, 2019

PROBLEM:

Food Banks of America, a 501 (c) not-for-profit organization, has been operating for two years. The December 31, 2018 Statement of Position has the following balances:

• Cash:                                                                                      $50,000
• Balance Sheet: Net Assets Unrestricted By Donor                            $44,000
• Net Assets Restricted by Donor                                                               $6,000

For the year 2019, the Food Banks of America had the following transactions:

1. FBA received an unrestricted donation from a donor in cash for $1,000
2. Another donor pledged to give money, by 2021, in the amount of $3,000.

Bad Debt is estimated to be 1%.

3. The FBA received a car with a fair value of $2,000 on the day of the donation. They took depreciation expense for the year of $200.
4. A generous CPA donor volunteered to provide the annual audit at a fair market value of $5,000.
5. A donor who loves the food bank, donated $4,000 in cash to be used only to provide fresh vegetables for clients.
6. Of the restricted donation in #5 above, the FBA purchased fresh vegetables for $,2000.

 

Transcribed Image Text:

Cash Pledges Receivable Allowance for Uncollectable Pledges Car (Net) 1,800 Food Banks of America Statement of Financial Position As of December 31, 2019 Total (Assets) Contributions-Unrestricted Contributions-Unrestricted Donated Revenue (auditor) Total (Liab + Net Assets) Food Banks of America Statement of Activities For the Period Ended December 31, 2019 by Donor by Donor $53,000 3,000 Contributions-Restricted by Donor Contributions-Restricted by Donor Net Assets Unrestricted By Donor Net Assets Restricted By Donor Expense for Depreciation Loss for Uncollectable Pledges Expense for Auditor Services Expense for Food Total Expenses Change in Activities for the Year Net Assets from Last Year Net Assets at End of Year Total Contributions Net Assets Released - Unrestricted by Donor Net Assets Released Restricted by Donor Net Assets Released - Unrestricted by Donor Net Assets Released - Restricted by Donor Total Net Unrestricted By Donor $ $ $ $ $ $46,800 $30 $46,800 $10,970 $57.800 $ $57,800 Restricted By Donor $ $10,970 Cash Pledges Receivable Allowance for Uncollectable Pledges Car (Net) 1,800 Food Banks of America Statement of Financial Position As of December 31, 2019 Total (Assets) Contributions-Unrestricted Contributions-Unrestricted Donated Revenue (auditor) Total (Liab + Net Assets) Food Banks of America Statement of Activities For the Period Ended December 31, 2019 by Donor by Donor $53,000 3,000 Contributions-Restricted by Donor Contributions-Restricted by Donor Net Assets Unrestricted By Donor Net Assets Restricted By Donor Expense for Depreciation Loss for Uncollectable Pledges Expense for Auditor Services Expense for Food Total Expenses Change in Activities for the Year Net Assets from Last Year Net Assets at End of Year Total Contributions Net Assets Released - Unrestricted by Donor Net Assets Released Restricted by Donor Net Assets Released - Unrestricted by Donor Net Assets Released - Restricted by Donor Total Net Unrestricted By Donor $ $ $ $ $ $46,800 $30 $46,800 $10,970 $57.800 $ $57,800 Restricted By Donor $ $10,970

Answer rating: 100% (QA)

Answer Food Banks of America is a 501 c notforprofit organization that has been operating for two years The organizations December 31 2018 Statement of Position shows a cash balance of 50000 net assets unrestricted by donor of 44000 and net assets restricted by donor of 6000 For the year 2019 the Food Banks of America had the following transactions FBA received an unrestricted donation from a donor in cash for 1000 The contribution of 1000 from the donor is unrestricted and it will increase the organizations unrestricted net assets As a result the statement of activities will show 1000 under contributionsunrestricted by donor Another donor pledged to give money by 2021 in the amount of 3000 The pledge of 3000 is not recognized as revenue until the money is received or the pledge is fulfilled Therefore no entry is made for this transaction Bad Debt is estimated to be 1 The bad debt estimate is used to account for potential losses from uncollectible pledges An allowance for uncollectible pledges account is created to recognize the potential loss The allowance is calculated by multiplying the estimated bad debt rate by the amount of pledges receivable As a result the statement of activities will show 30 under the allowance for uncollectible pledges The FBA received a car with a fair value of 2000 on the day of the donation They took depreciation expense for the year of 200 The organization received a car which is an asset with a fair value of 2000 The depreciation expense for the year is calculated as the cost of the asset divided by its useful life Assuming a useful life of 10 years the depreciation expense for the year is 200 As a result the statement of activities will show 200 under expense for depreciation A generous CPA donor volunteered to provide the annual audit at a fair market value of 5000 The donation of audit services is a contribution of time and expertise which is not recognized as revenue or an expense Therefore no entry is made for this transaction A donor who loves the food bank donated 4000 in cash to be used only to provide fresh vegetables for clients The donation of 4000 is restricted to a specific purpose providing fresh vegetables to clients The organization will recognize the contribution as revenue and create a restricted net asset ... View the full answer