The following events occurred as part of the operations of Kronke Private University for the year 2018 (all amounts are in 000’s): a. To construct a new business building, the university floated at par a $20,000,000, 8% serial bond issued on July 1. Interest is to be paid on December 31 and June 30. In addition, contributions from the community specifically for the new building totaled $5,000,000. b. Payments for construction to date total $7,000,000. c. Interest payments are made on December 31. d. Construction of the building is completed at an additional cost of $18,000,000. Payment is made for $16,000,000; the balance will be paid in one year under a retained percentage agreement. Institutional policy is to release donor restrictions when assets are placed in service. e. The first bond serial payment of $2,000,000 plus interest is paid on December 31. f. A gift of land and a building was received, appraised at $200,000 and $350,000, respectively. The gift was made on the condition that the university assume a $90,000 mortgage on the property. The university assumed the mortgage. g. Pledges with a present value of $200,000 to be paid over the next five years were received. The funds will be restricted for remodeling the building received in item (f ). It is estimated that $20,000 of the pledges will not be collected. h. A donation of $500,000 of stock was made by a wealthy citizen. The stock cannot be sold for five years. After the 5-year period, the stock can be sold, and any proceeds are to be used to finance campus construction projects. i. Dividends of $10,000 on the stock in item (h) were received and were also restricted for construction projects. j. Depreciation on the building received in item (f ) totaled $25,000. 1. Prepare journal entries to record these events for Kronke Private University. Assume that fund accounting is not used. 2. Prepare a statement of activities for the period ended June 30, 2018.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
The following events occurred as part of the operations of Kronke Private University for the year 2018 (all amounts are in 000’s):
a. To construct a new business building, the university floated at par a $20,000,000, 8% serial bond issued on July 1. Interest is to be paid on December 31 and June 30. In addition, contributions from the community specifically for the new building totaled $5,000,000.
b. Payments for construction to date total $7,000,000.
c. Interest payments are made on December 31.
d. Construction of the building is completed at an additional cost of $18,000,000. Payment is made for $16,000,000; the balance will be paid in one year under a retained percentage agreement. Institutional policy is to release donor restrictions when assets are placed in service.
e. The first bond serial payment of $2,000,000 plus interest is paid on December 31.
f. A gift of land and a building was received, appraised at $200,000 and $350,000, respectively. The gift was made on the condition that the university assume a $90,000 mortgage on the property. The university assumed the mortgage.
g. Pledges with a present value of $200,000 to be paid over the next five years were received. The funds will be restricted for remodeling the building received in item (f ). It is estimated that $20,000 of the pledges will not be collected.
h. A donation of $500,000 of stock was made by a wealthy citizen. The stock cannot be sold for five years. After the 5-year period, the stock can be sold, and any proceeds are to be used to finance campus construction projects.
i. Dividends of $10,000 on the stock in item (h) were received and were also restricted for construction projects.
j. Depreciation on the building received in item (f ) totaled $25,000.
1. Prepare
2. Prepare a statement of activities for the period ended June 30, 2018.
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