Homework answers / question archive / Chapter 15 – Homework   Colleges and universities look to which standard-setting body for GAAP? The GASB The FASB The NACUBO It depends on whether the entity is public, private or for –profit     Which of the following statements is prepared by both a private and public college or university? Statement of net assets Statement of cash flows Statement of activities Statement of net position     Which of the following is a true statement about the tuition revenue in a college or university? Scholarships should always be reported as expenses Tuition receivables estimated to be uncollectible should be reported as an operating expense Refunds should be reported as deductions from gross revenue All of these statements are true   A university expended $2,475,000 on a new parking facility

Chapter 15 – Homework   Colleges and universities look to which standard-setting body for GAAP? The GASB The FASB The NACUBO It depends on whether the entity is public, private or for –profit     Which of the following statements is prepared by both a private and public college or university? Statement of net assets Statement of cash flows Statement of activities Statement of net position     Which of the following is a true statement about the tuition revenue in a college or university? Scholarships should always be reported as expenses Tuition receivables estimated to be uncollectible should be reported as an operating expense Refunds should be reported as deductions from gross revenue All of these statements are true   A university expended $2,475,000 on a new parking facility

Accounting

Share With

---

Chapter 15 – Homework

 

1. Colleges and universities look to which standard-setting body for GAAP?

• The GASB
• The FASB
• The NACUBO
• It depends on whether the entity is public, private or for –profit

 

 

2. Which of the following statements is prepared by both a private and public college or university?

• Statement of net assets
• Statement of cash flows
• Statement of activities
• Statement of net position

 

 

3. Which of the following is a true statement about the tuition revenue in a college or university?

• Scholarships should always be reported as expenses
• Tuition receivables estimated to be uncollectible should be reported as an operating expense
• Refunds should be reported as deductions from gross revenue
• All of these statements are true

 

4. A university expended $2,475,000 on a new parking facility. The transaction was reported as an investing activity on its direct method statement of cash flows. What type of university prepared the statement of cash flows?

• A public university
• A for-profit university
• A private university
• Either A for-profit university or A private university

 

 

5. Last year Zelnick College showed a positive revenue over expenses number for the first time in several years. The college is funded with contributions, grants, two government appropriations (state and local), and tuition and fees. Zelnick College is most likely what type of college?

• A private for-profit college
• A private not-for profit college
• A public university engaged primarily in governmental activities
• A public university engaged primarily in business-type activities

 

 

6. Gresham College is a local private college. When reviewing the college’s financial reports, you would expect to see which of the following categories on their statement of assets and liabilities?

• Unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets
• Unrestricted net position, temporarily restricted net position, and permanently restricted net position
• Unrestricted net position, restricted net position and net investment in capital assets
• Unrestricted net assets, restricted net assets and net investment in capital assets.

 

 

7. How would a university account for funds received from an external donor that are to be retained and invested, with the related earnings restricted to the purchase of library books?

• Temporarily restricted net assets in a private university
• Permanently restricted net position in a private university
• Unrestricted net assets/position in either a public or private university
• Nonspendable, endowment in a public university

 

 

8. Which of the following statements is incorrect concerning the financial reports of colleges and universities?

• The NACUBO account titles are frequently used for reporting revenues and expenses by both private and public entities
• State appropriations are reported as nonoperating revenues by public entities
• Intangible assets are reported as a classification within capital assets by private entities
• Conditional contributions are not recognized by public or private entities.

 

9. Many endowment management policies establish a spending rate for the college or university’s endowment funds.  A spending rate is best defined as:

• The portion of the total return that can currently be used to carry out the endowment purpose.
• The average rate of return earned on the endowment investments for the current fiscal year
• The percentage of the endowment corpus that can be used to carry out the endowment purpose.

 

10. Which of the following is a performance measure of an outcome?

• Farley College students complete an undergraduate degree in an average of 4.3 years
• A state survey of employers showed that 70% of employers ranked Beasley State University’s graduates as “very well prepared” to enter the workforce
• Within 6 months of graduation, 75% of undergraduate students at Gravette College have a job in their field
• Faculty members at Ballard University published an average of  2 peer reviewed papers each year.

 

 

11. Steiner College’s statement of financial position for the year ended June 30, 2016, is presented here. Steiner is a private college.

 

STEINER COLLEGE

Statement of Financial Position

June 30, 2016

(amounts in thousands)

 

Assets

Cash and cash equivalents                                                                                                          $734

Short-term investments                                                                                                              7,666

Tuition and fees receivable (net of doubtful accounts of $12)                                                     230

Pledges receivable (net of doubtful accounts of $280)                                                             5,872

Prepaid assets                                                                                                                             1,364

Property, plant and equipment (net of accumulated depreciation of $104,240)                   281,404

Investments (at fair value, cost of $162,000)                                                                        158,400

 

Total assets                                                                                                                           $455,670

 

Liabilities and Net Assets

Liabilities:

Accounts payable and accrued liabilities                                                                               $21,130

Deposits held in custody for others                                                                                              700

Unearned revenue                                                                                                                         900

Bonds payable                                                                                                                         99,000

 

Total liabilities                                                                                                            121,730

Net Assets:

Unrestricted                                                                            $104,000

Temporarily restricted                                                             33,040

Permanently restricted                                                            196,900

 

Total net assets                                                                                                                       333,940

 

Total liabilities and net assets                                                                                              $455,670

 

The following transaction information (amounts in thousands) pertains to the year ended June 30, 2017.

1. During the year charges for tuition and fees were $244,500; scholarships were $16,300; and tuition waivers for scholastics achievement were $5,100.  After payment was received tuition refunds of $11,200 were given.  Tuition waiver of $17,300 for students serving as teaching assistants for instruction were accrued
2. The college received unrestricted cash contributions of $2,080, pledges to be collected in 2018 of $550, and cash contributions to the endowments of $335.  It also collected $820 of Pledges Receivables that were unrestricted
3. Collections on Tuition and Fees receivable totaled $222,600.
4. Net deposits returned to students totaled $10
5. Expenses were incurred for:

 

Instruction                               $86,100

Academic support                   23,300

Student services                      37,700

Institutional support                28,500

 

Related to the expenses incurred: prepaid assets of $534 were used, $4,776 of the expenses were accrued, and the remaining expenses were paid.  Expenses incurred resulted in the release of 7,320 in temporarily restricted net assets.

 

6. The ending balance in Accounts Payable and Accrued Liabilities was $1,935
7. Investment earnings received for the period were $3,930, of which $2,070 was temporarily restricted
8. Adjusting entries for the period were made to increase Allowance for Doubtful Accounts by $20, to record depreciation expense of $26,400 (charged 70% to instruction and 30% to academic support), to adjust tuition revenue for an increase in unearned revenue of $10, and to recognize an increase in fair value of investments of $4,700 ($790 was related to temporarily restricted net assets, $1,610 was related to permanently restricted net assets, the remainder was related to unrestricted net assets.)
9. Nominal accounts were closed

 

a-1.  Prepare journal entries to record the foregoing transactions for the year ended June 30, 2017.

 

1a.  Record the tuition and fees for the year

 

                       

 

1b.  Record the refund of tuition and fees for the year

 

1c.  Record the tuition waivers accrued for the year

 

2.  Record the receipt of unrestricted cash contributions, pledges and endowments.  Do not Net pledges receivable account

 

 

3. Record the receipt of tuition and fees

 

 

4. Record the refund of deposits

 

5. Record the expenses for the year

5b. Record the release in the temporarily restricted net assets

 

 

6. Record the payment of liabilities

           

 

7. Record the receipt of income from investments

 

8a. Record the adjusting entry for the period to increase allowance for doubtful accounts

 

8b. Record the depreciation entry for the year

 

8c. Record the increase in unearned revenue

 

8d. Record the increase in the fair value of the investment.

 

9a.  Record the closure of the nominal accounts

 

 

 

9b.  Record the transfer to the net assets-temporarily restricted account

 

9c.  Record the transfer to the permanently restricted account

 

 

9d.  Record the entry to reclassify the net assets accounts

b.  prepare a statement of activities for the year ended June 30, 2017.

 

 

c. prepare a statement of financial position for the year ended June 30, 2017.

 

 

 

 

12. The statement of net position of South State University, a governmentally owned university, as of the end of its fiscal year June 30, 2016, follows.

 

SOUTH STATE UNIVERSITY

Statement of Net Position

June 30, 2016

 

Assets

Cash                                                                                                                            $340,000

Accounts Receivable (net of doubtful accounts of $15,000)                                     370,000

Investments                                                                                                                 250,000

Capital assets                                                                          $1,750,000

Accumulated depreciation                                                      275,000___                 _________

 

            Total assets                                                                                                      2,435,000

 

 

Liabilities                   

Accounts payable                                                                                                        105,000

Accrued liabilities                                                                                                       40,000

Unearned revenue                                                                                                       25,000

Bonds payable                                                                                                            600,000

 

            Total liabilities                                                                                     770,000

Net position                                                                                                   

Net investment in capital assets                                                                                  875,000

Restricted                                                                                                                    215,000

Unrestricted                                                                                                                575,000

                                                           

Total net position                                                                                                        $1,665,000

 

The following information pertains to the year ended June 30, 2017

1. South billed tuition and fees totaling $1,500,000 and provided $250,000 in scholarship waivers.
2. Unearned revenue at June 30, 2016 was earned during the year ended June 30, 2017
3. Notification was received from the federal government that up to $50,000 in funds could be received in the current year for costs incurred in developing student performance measures
4. During the year, the university received an unrestricted appropriation of $3,000,000 from the state
5. Equipment for the student computer labs was purchased for cash in the amount of $525,000
6. During the year, $800,000 in cash contributions was received from alumni.  Of the amount contributed $200,000 is to be used for construction of a new library
7. Interest expense on the bonds payable in the amount of $48,000 was paid
8. Student tuition refunds of $113,000 were made.  Cash collections of tuition as fees totaled $1,458,700, $138,000 of which applied to the semester beginning in August 2017.  Investment income of $13,000 was earned and collected during the year
9. General expenses of $4,684,000 related to the administration and operation of academic programs and research expenses of $37,000 related to the development of student performance measures were recorded in the voucher system.  At June 30, 2017, the accounts payable balance was $75,000
10. Accrued liabilities at June 30, 2016, were paid
11. At year-end, adjusting entries were made.  Depreciation and capital assets totaled $90,000.  The allowance for doubtful accounts were adjusted to $17,000.  Accrued interest on investments was $1,250.  The fair value of investments at year-end was $262,000.  Of the income earned on investments, $5,230 was restricted
12. Nominal accounts were closed and net position amounts were reclassified as necessary

 

a-1.  Prepare journal entries to record the foregoing transactions for the year ended June 30, 2017.

 

1. Record the tuition and fees receivable, the waivers and scholarships

 

2. Record the unearned revenue for the year

 

3. Record the entry for grants due from the Federal government for student performance measures

 

 

4. Record the receipt of unrestricted appropriation from the state

 

 

5. Record the purchase of equipment
6. Record the receipt of contributions from alumni

 

 

 

 

7. Record the payment of interest on the bonds

 

8a.  Record the refund of tuition and fees

     

 

8b.  Record the receipt of balance tuition and fees and interest income for the year

 

9a.  Record the general expenses incurred during the year

 

                 

9b.  Record the general expenses paid during the year

 

 

 

9c.  Record the expenses related to the development of student performance measure

10. Record the accrual liabilities paid during the year

 

 

11a.  Record the adjustment required for bad debts

 

 

11b.  Record the depreciation entry for the year

 

 

11c.  Record the interest accrued on investments for the year

11d.  Record the increase in fair value of investments

 

 

a-2.  Prepare closing entries for the year ended June 30, 2017

 

1. Record the closure of all nominal accounts

 

2. Record the entry to reclassify the net investment in capital assets

 

3. Record the entry to reclassify net position-restricted

 

 

b.  Prepare a statement of net position for the year ended June 30, 2017

 

 

13. Following are several transactions involving a university

 

1. In fiscal year 2017, the university was notified by the federal government that in 2018 it would receive a $500,000 grant for wetlands research
2. The university received a $500,000 endowment
3. For the fiscal year, the university recorded $2,500,000 in tuition and fees revenues.  Cash refunds of $325,000 were given.
4. The university provided $12,600 in tuition waivers for students with outstanding academic performance
5. During the year, the university constructed a new street, to allow for the expansion of its student housing efforts.  The cost of the street was $1,980,000
6. The biology department spent $25,000 on wetland research
7. At year-end, $1,670 of estimated uncollectible tuition and fees were recorded.

 

 

 

 

1. Prepare journal entries to record the foregoing transactions assuming the university is a private institution

 

2. Prepare journal entries to record the foregoing transactions, assuming the university is a public institution

1. Record the grant receivable from the Federal Government for wetlands research

 

2. The University received a $500,000 endowment

 

3. Record the receipt of tuition and fees revenue

 

3b.  Record the refund of tuition and fees revenue

 

 

4.  The university provided $12,600 in tuition waivers for students with outstanding academic performance
5. During the year, the university constructed a new street, to allow for the expansion of its student housing efforts.  The cost of the street was $1,980,000

 

 

6. The biology department spent $25,000 on wetland research

 

 

7. At year-end, $1,670 of estimated uncollectible tuition and fees was recorded