30 Jun Question Description . Classification of Revenue
Question Description
. Classification of Revenues/Support and Expenses. For each of the independent transactions listed below, indicate which of the listed revenue or contribution classifications apply by choosing one or more of the letters from the listed items. Choose all that apply.
Transaction
A museum gift shop sold prints of famous paintings.
At the end of the year a donor agreed to contribute $400,000 to a local artists’ fund if the museum raised a matching amount in the first quarter of the upcoming year.
A registered nurse volunteered 10 hours a week to a local agency for disabled persons.
A donor contributed $1 million to a not-for-prof it hospital for a new clinic.
An NFP art association hosted its annual art exhibition for the association’s major contributors.
A donor contributed securities valued at $10 million to be permanently invested. Earnings thereon are stipulated by the donor to be used for eye research.
A local computer store donated computers for children’s use at an NFP hands-on children’s museum.
A local PTA received cash contributions of $2,000 to be used for its operating activities.
Revenue and Contribution Classifications
Revenue
Contributions – Unrestricted
Contributions – Temporarily Restricted
Contribution – Permanently Restricted
None of the above.
2. Recording and Reporting Transactions. INVOLVE was incorporated as a not-for-prof it voluntary health and welfare organization on January 1, 2017. During the fiscal year ended December 31, 2017, the following transactions occurred.
A business donated rent-free office space to the organization that would normally rent for $35,000 a year.
A fund drive raised $185,000 in cash and $100,000 in pledges that will be paid within one year. A state government grant of $150,000 was received for program operating costs related to public health eduction.
Salaries and fringe benefits paid during the year amounted to $208,560. At year-end, an additional $16,000 of salaries and fringe benefits were accrued.
A donor pledged $100,000 for construction of a new building payable over the following five fiscal years, commencing in 2019. The discounted value of the pledge is expected to be $94,260. Office equipment was purchased for $12,000. The useful life of the equipment is estimated to be five years. Office furniture with a fair value of $9,600 was donated by a local office supply company. The furniture has an estimated useful life of 10 years. Furniture and equipment are considered unrestricted net assets by INVOLVE.
Telephone expense for the year was $5,200, printing and postage expense was $12,000 for the year, utilities for the year were $8,300, and supplies expense was $4,300 for the year. At year-end, an immaterial amount of supplies remained on hand and the balance in accounts payable was $3,600.
Volunteers contributed $15,000 of time to help with answering the phones, mailing materials, and various other clerical activities.
It is estimated that 90 percent all of the pledges made for the 2018 year will be collected. Depreciation expense is recorded for the full year on the assets recorded in item 5.
Salaries and wages were allocated to program services and support services in the following percentages: public health education, 35 percent; community service, 30 percent; management and general, 20 percent; and fund-raising, 15 percent. All other expenses were allocated in the following percentages: public health education, 35 percent; community service, 20 percent; management and general, 25 percent; and fund- raising, 20 percent.
Net assets were released to reflect satisfaction of state grant requirements that the grant resources be used for program purposes.
All nominal accounts were closed to the appropriate net asset accoun
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