Ethan Allen University Is a Private University Following FASB Standards

question 113

Essay

Ethan Allen University is a private university following FASB standards for reporting.The following transactions took place during the year ended June 30,2012.
(1)EAU had received $600,000 in tuition in June 2012 for the summer session that runs from
June 16 to August 14,2011 and had deferred $450,000 (75%)at June 30,2011.
(2)EAU received in cash tuition of $3,320,000; unrestricted contributions of $320,000;
contributions permanently restricted by donor agreement for the endowment of $805,000,
unrestricted interest income on endowments of $250,000; and auxiliary enterprise revenue of
$2,500,000.
(3)Contributions for student scholarships were received in the amount of $430,000.$360,000
was awarded to students during the year.Students receiving these scholarships are required to
work 10 hours a week (institutional support).
(4)Expenses amounted to $1,400,000 for instruction,$800,000 for research,$600,000 for
public service,$2,000,000 for auxiliary enterprises,$300,000 for student services,and
$890,000 for institutional support.Included in these amounts is $460,000 of depreciation.All
other expenses ($5,530,000)were paid in cash.Plant assets are classified as unrestricted.
(5)EAU received $580,000 in tuition in mid June 2012 for the summer session ending in mid
August 2012.
(6)At year-end,endowment investments were determined to have a fair value of $50,000 in
excess of their recorded amounts.No restrictions apply to this income.
Required:
(a)Prepare journal entries to record these events including closing entries.
(b)Prepare a Statement of Unrestricted Revenues,Expenses and Other Changes in
Unrestricted Net Assets.
(c)Prepare a Statement of Activities for the year ending June 30,2012,assuming the June 30,
2011 balances in net assets are:
$2,050,000 unrestricted,$830,000 temporarily restricted,and
$4,000,000 permanently restricted.

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