The Association of Women in Government established an Educational Foundation to raise money to support scholarship and other education initiatives.
The Association of Women in Government established an Educational Foundation to raise money to support scholarship and other education initiatives. The Educational Foundation is a private not-for-profit. Members of the Association of Women in Government periodically make donations to the Educational Foundation. With the exception of the gift described below, these are unrestricted. In December 2019, a donor established a permanent endowment with an initial payment of $120,000 and a pledge to provide $10,000 per year for 3 years, beginning in December 2020. At the time, the pledge was recorded at the present value ($27,232), discounted at 5 percent. Earnings of the endowment (interest and investment gains) are derived from investment in AAA-rated corporate bonds and are restricted for the payment of scholarships. At the end of 2019, the organization had the following account balances:
The following took place during 2020:
1. The Educational Foundation has no employees. Administrative costs are limited to supplies, postage, and photocopying. Postage and photocopying expenses (paid in cash) totaled $1,980 for the year. The Foundation purchased supplies of $1,900 on account and made payments of $1,700. Unused supplies at year-end totaled $510.
2. Unrestricted donations received totaled $9,600.
3. Interest received on the bonds totaled $6,800, which included amounts receivable at the end of 2019. Accrued interest receivable at December 31, 2020, totaled $600.
4. The fair value of the bonds at year-end was determined to be $123,400. Income, including increases in the value of endowment investments, may be used for scholarships in the year earned.
5. The donor who established the permanent endowment made the scheduled payment of $10,000 at the end of 2020. (Hint: First record the increase in the present value of the pledge and then record the receipt of the $10,000.)
6. New scholarships were awarded in the amount of $17,000. Payments of scholarships (including those amounts accrued at the end of the previous year) totaled $19,500 during the year. Consistent with FASB standards, scholarships are assumed to be awarded first from resources provided from restricted revenues. (Hint: Add beginning temporarily restricted net assets to endowment earnings to determine the amount to reclassify from temporarily restricted net assets.)
Using the information above and the Excel template provided:
a. Prepare journal entries and post entries to the T-accounts.
b. Prepare closing entries.
c. Prepare a Statement of Activities, Statement of Financial Position, and Statement of Cash Flows for the year ending December 31, 2020.
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