Answer:
Community Sports Club
a. Adjusting Journal Entries on March 31, 20x3:
Description Debit Credit
Investment Account $7,000
Unrealized Investment Gains $7,000
Depreciation Expense $12,000
Accumulated Depreciation - Building $4,000
Acc. Depreciation - Furniture & Equipment 8,000
House Expenses $9,000
Snack bar & soda fountain 2,000
General and administrative 1,000
Depreciation Expenses $12,000
Cost of Inventory sold $4,000
Inventory $4,000
b. Financial Statement of Activities for the year ended March 31, 20x3:
Cumulative excess of revenue over expenses $12,000
Cost of Inventory Sold (4,000)
Depreciation Expenses:
House Expenses (9,000)
Snack bar & soda fountain (2,000)
General and administrative (1,000)
Cumulative excess of revenue over expenses ($4,000)
Explanation:
Data and Calculations:
1. Community Sports Club
Unadjusted Trial balance for April 1, 20X2:
Debit Credit
Cash $9,000
Investment 58,000
Inventories 5,000
Land 10,000
Building 164,000
Accumulated depreciation---building $130,000
Furniture and equipment 54,000
Accumulated depreciation furniture & equipment 46,000
Accounts payable 12,000
Participation certificates 100,000
Cumulative excess of revenue over expenses 12,000
Total $300,000 $300,000
2. Adjusted Trial Balance for March 31, 20x3:
Debit Credit
Cash $9,000
Investment 65,000
Inventories 1,000
Land 10,000
Building 164,000
Accumulated depreciation---building $134,000
Furniture and equipment 54,000
Accumulated depreciation furniture & equipment 54,000
Accounts payable 12,000
Participation certificates 100,000
Unrealized Investment Gain 7,000
Depreciation Expenses:
House 9,000
Snack bar & Soda Fountain 2,000
General and Administrative 1,000
Cost of Inventory Sold 4,000
Cumulative excess of revenue over expenses 12,000
Total $319,000 $319,000
3. The Club's Statement of Activities is like the income statement of a business entity. This statement reports the revenues and expenses of the club and the changes in the net assets of the company, like depreciation expenses and cost of inventory. Like the income statement it reports the excess of revenue over expenses or vice versa. The resulting figure (difference) is not called the net income or loss, but excess of revenue over expenses.
