Question

For Youth Agency (FYA) is a voluntary health and welfare organization that provides counseling and recreation programs for youthful offenders and delinquents. FYA’s programs are financed through a contract with the county in which it is located and through contributions from local citizens. Its contract with the county provides for reimbursement of allowable costs based on monthly billings to the county. FYA uses the accrual basis of accounting, and the following transactions occurred during 2021:

1. FYA received cash in the amount of $25,000, to be used as the FYA board of directors considers appropriate.

2. FYA received a gift of Intel stock that had a fair market value of $1,300 total at the time of the gift. The donor sent FYA’s president a letter with the gift, saying that proceeds of the stock should be used only to purchase athletic equipment for the basketball team. FYA sold the stock upon receipt.

3. FYA paid $800 cash for athletic equipment, using some of the proceeds received in Transaction 2. The expense was charged to the Recreation programs account.

4. FYA spent $12,000 cash on the following: $8,000 for counseling programs, $3,000 for recreation programs, and $1,000 for administration.

5. FYA billed the county $6,500 for costs incurred under its contract.

6. A licensed social worker in the area donated 100 hours of her time to FYA. Her normal hourly rate is $50 per hour. The CEO appreciates the donation because otherwise he would have to purchase the counseling services.

7. FYA borrowed $10,000 from the local bank on an unsecured note. The whole amount will be repaid next year.

8. FYA paid the local bank $1,600, of which $400 was interest.

9. FYA recorded $300 of depreciation for the year.

10. FYA prepaid next year’s rent of $12,000.

11. FYA determined that it will not be able to collect $2,500 of pledges.

Record the above transactions. Then, using the beginning balances in this table, produce the balance sheet, activity statement, and cash flow statement.

Account	Balance
Cash	$2,000
Contracts Receivable	1,000
Equipment	2,500
Net Assets without Donor Restrictions	6,000
Pledges Receivable, Net of Allowance	500

MUST use this template to complete.

Problem 11-17
SOLUTION
	Transactions Worksheet
		Assets						Liabilities		Net Assets
		Cash	Pledges Receivable, net	Contract Receivables	Investments	Prepaid Expense	Equipment	Note Payable		Without Donor Restrictions		With Donor Restrictions
	Beginning Balance	$2,000	$500	$1,000	$0	$0	$2,500	$0		$6,000		$0
	1										Donation Revenue
	2a												Donation Revenue
	2b
	3a										Net Asset Released from Restriction		Net Asset Released from Restriction
	3b										Recreation Expense
	4										Counseling Expense
											Recreation Expense
											Administration Expense
	5										Contract Revenue
	6										Donated Services
											Donated Services
	7
	8										Interest Expense
	9										Depreciation Expense
	10
	11										Bad Debt Expense
	Ending Balance	$2,000	$500	$1,000	$0	$0	$2,500	$0		$6,000		$0

Answer 1

Sol:

Transaction worksheet
Transaction particulasrs	Debit	Credit
Cash on pledged	17000
Athletic equipment		800
Counselling programs		8000
Recreation programs		3000
Administration		1000
Borrowings from bank	10000
Repayment to bank		1600
Prepaid rent		12000
Excess of debit over credit		600
	27000	27000
	Opening	Addition	Depreciation	Clsoing
Cash	2000	600		2600
Contracts receivable	1000	6500		7500
Equipment	2500	800	300	3000
Pledges receivable	500	6500		7000
Unrestricted net assets	6000	0	0	6000
Restricted	0	500	0	500
Borrowings from bank	0	10000	1200	10000	Cr
Prepaid rent	0	12000	0	12000