On August 15, 20X1, the European Exchange Club (EEC) was formed in an effort to create a united social group out of several separate regional clubs in the vicinity of the city of Decker, located in central Canada. The purpose of the group is to combine resources to meet the recreational, cultural, and social needs of their collective members. EEC was formed through the collaboration of the following clubs and their memberships:
Members
The Canadian Russian Society................................................................................... $ 12,300
The Italian Club of Canada......................................................................................... 10,800
Portuguese Cultural Foundation................................................................................... 4,100
Association of Greeks of the World............................................................................. 2,700
The German Groups........................................................................................................ 1,100
Other............................................................................................................................... 1,700
.................................................................................................................................... $ 32,700
It is now December 20X7, and EEC’s executives have spent the past few years planning and preparing for the club’s operation. The club’s community centre is expected to be fully completed next year. Its facilities will include the following:
• A multi- purpose building to house banquets, meetings, and arts activities;
• Hiking trails;
• Indoor/ outdoor tennis facilities;
• Bicycle trails;
• Baseball diamonds;
• An

Required
Prepare the requested report for the president.
Exhibit J EUROPEAN EXCHANGE CLUB YEARLY BUDGET
Operating revenues
Membership fees......................................................................................................... $ 91,000
Social rentals................................................................................................................ 185,000
Meeting rentals............................................................................................................. 50,000
Sports rentals.................................................................................................................. 23,000
Concessions.................................................................................................................... 61,000
Fund raising events....................................................................................................... 225,000
Total operating revenues......................................................................................... $ 635,000
Operating costs
Salaries...................................................................................................................... $ 363,000
Administrative costs................................................................................................... 39,000
Maintenance................................................................................................................ 126,000
Utilities........................................................................................................................ 112,000
Educational scholarships............................................................................................. 100,000
Total operating costs................................................................................................. $ 740,000
Exhibit K
Notes From Meeting
1. Under the lease agreement with the province, EEC is responsible for maintenance and all costs of improvements. The lease agreement provides for 20 renewal terms of five years’ duration each. Renewal is based on the condition that EEC makes the club’s services available to all present and future EEC member clubs and their membership.
2. EEC has requested an operating grant from the provincial government. Its proposal asks the province to provide EEC with annual funds to cover 50% of “approved” operating costs incurred to provide services to all club members. The city of Decker wishes to construct an arena and a swimming pool and has opposed the provincial operating grant. The city has asked to be the first in line for available provincial funds. The province has informed EEC that if funds are granted, EEC will have to supply audited financial statements of the organization for all future fiscal year- ends. The committee members suspect that they will have to compromise on their proposal and are having problems determining the minimum annual funds required by the club from the province.
3. The Russian and Italian clubs have been arguing with other clubs over the equalization payments required from each club. Currently, each club makes payments to EEC based upon its proportionate membership. Payments for each calendar year are made on February 1 of the following year.
4. The accounting function is a major concern of the member club representatives. In particular, they have raised the following issues:
a) Several fundraising events are organized by individual member clubs.
b) Any donations to EEC are received through the member clubs.
c) No accounting has been made of services donated to EEC by the members of the individual clubs.
d) EEC has approached a bank to assist in future phases of the club’s development. The bank has informed EEC that it is interested in asset values and EEC’s ability to repay the loans.