Foundation The Sticky Needle runs a creative center that offers various courses such as: knitting, crochet,...

  

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Foundation The Sticky Needle runs a creative center that offers various courses such as: knitting, crochet, quilting, cross stitching and even textile paining and colouring, and textile crafts. One's a year The Sticky Needle organizes an exhibition with textile art and craft supplied by the course members. These exhibitions have acquired a certain regional status. Due to this, the foundation is financially supported by several companies and donations are received from private individuals. The treasurer of the foundation's committee has made a financial report for 2019. Cash flow statement (in euros) Cash outflows Rent of the building Salary manager of the center Fees paid to the instructors. Purchase of materials: Energy and water Management expenses Cleaning costs Insurances Interest Redemption bank loan Miscellaneous Total cash-out Cash inflows Course fees Subsidies council Subsidies government Entrance fees exhibitions. Donations from private persons Sponsor contributors. Miscellaneous Total cash-in Loss 18,500.00 28,500.00 12,000.00 5,550,00 8,250.00 1,450.00 5.800.00 4.165.00 1,718.75 7.500.00 2,500.75 195,934.5 60,000.00 9,750.00 4,500,00 2,775.50 450,00 7,350.00 1,350.00 86,175.50 -9.759.00 To finance all of this, a bank loan of 75,000 euros will be available from 1-1-2019 at an annual interest rate of 2,5%. The interest is paid per month at the beginning of the next month. This bank loan must be repaid within 10 years. The redemption. is always carried out at the end of the year, on 31 December. The board of directors of the foundation gathers in a slight state of panic. The loss of € 9,759 is very worrying and an immediate increase in course fees is considered. A new member of the board, with a background in financial management, remarks that the overview is based on cash and cash equivalents and that, based on this, no conclusions can be drawn with respect to profit and losses of the foundation. The overview only shows that the cash and cash equivalents have reduced by € 9,759. It is therefore incorrect to call this a loss. Whether there is a positive or a negative operating result remains to be seen. Further examination shows that: • On December 31, 2018 a new knitting machine was purchased for € 4,000. The lifespan is set to eight years. The residual value after 8 years of service is estimated to be € 250 and a straight-line depreciation method is applied. • The rent for 2 years to pard at the part of 2019. • The rent for 2 years is paid at the start of 2019. • The subsidies from the council are € 3,250 per quarter and the subsidy was currently not received for the final quarter of 2019. • Of the € 5,550 purchased materials (wool, colouring agents, textiles, etc.) there was still an inventory of € 350 at the end of 2019. • The insurance premium for 2019 of € 2,250 was paid in January 2019 but the premium for 2020 was paid in December 2019, for which a reduction of € 335 was received. • End of 2019, course members paid € 5.000 in advance for courses that start in 2020. • The cost of the loan was not properly accounted for. Question A: Construct the starting balance sheet of 1-1- 2019, assuming the inventory is € 155 at that time, Equity = 0. (1 point) Question B: Construct the correct Income statement for 2019. Use (1) the relevant information from the 1st overview and (2) the information from the supplementary survey. (4 points) Question C: Construct the final balance sheet of 31-12- 2019. (5 points) Foundation The Sticky Needle runs a creative center that offers various courses such as: knitting, crochet, quilting, cross stitching and even textile paining and colouring, and textile crafts. One's a year The Sticky Needle organizes an exhibition with textile art and craft supplied by the course members. These exhibitions have acquired a certain regional status. Due to this, the foundation is financially supported by several companies and donations are received from private individuals. The treasurer of the foundation's committee has made a financial report for 2019. Cash flow statement (in euros) Cash outflows Rent of the building Salary manager of the center Fees paid to the instructors. Purchase of materials: Energy and water Management expenses Cleaning costs Insurances Interest Redemption bank loan Miscellaneous Total cash-out Cash inflows Course fees Subsidies council Subsidies government Entrance fees exhibitions. Donations from private persons Sponsor contributors. Miscellaneous Total cash-in Loss 18,500.00 28,500.00 12,000.00 5,550,00 8,250.00 1,450.00 5.800.00 4.165.00 1,718.75 7.500.00 2,500.75 195,934.5 60,000.00 9,750.00 4,500,00 2,775.50 450,00 7,350.00 1,350.00 86,175.50 -9.759.00 To finance all of this, a bank loan of 75,000 euros will be available from 1-1-2019 at an annual interest rate of 2,5%. The interest is paid per month at the beginning of the next month. This bank loan must be repaid within 10 years. The redemption. is always carried out at the end of the year, on 31 December. The board of directors of the foundation gathers in a slight state of panic. The loss of € 9,759 is very worrying and an immediate increase in course fees is considered. A new member of the board, with a background in financial management, remarks that the overview is based on cash and cash equivalents and that, based on this, no conclusions can be drawn with respect to profit and losses of the foundation. The overview only shows that the cash and cash equivalents have reduced by € 9,759. It is therefore incorrect to call this a loss. Whether there is a positive or a negative operating result remains to be seen. Further examination shows that: • On December 31, 2018 a new knitting machine was purchased for € 4,000. The lifespan is set to eight years. The residual value after 8 years of service is estimated to be € 250 and a straight-line depreciation method is applied. • The rent for 2 years to pard at the part of 2019. • The rent for 2 years is paid at the start of 2019. • The subsidies from the council are € 3,250 per quarter and the subsidy was currently not received for the final quarter of 2019. • Of the € 5,550 purchased materials (wool, colouring agents, textiles, etc.) there was still an inventory of € 350 at the end of 2019. • The insurance premium for 2019 of € 2,250 was paid in January 2019 but the premium for 2020 was paid in December 2019, for which a reduction of € 335 was received. • End of 2019, course members paid € 5.000 in advance for courses that start in 2020. • The cost of the loan was not properly accounted for. Question A: Construct the starting balance sheet of 1-1- 2019, assuming the inventory is € 155 at that time, Equity = 0. (1 point) Question B: Construct the correct Income statement for 2019. Use (1) the relevant information from the 1st overview and (2) the information from the supplementary survey. (4 points) Question C: Construct the final balance sheet of 31-12- 2019. (5 points)

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Question A Balance sheet as on 01012019 LiabilitiesAmount Assets Bank ... View the full answer