Example Banking Essay

834 words - 4 pages

, we have developed some recommendations. It is important that your Financial Statements communicate useful information to members, contributors, and others. Having easy to understand and clear Financial Statements will make donors confident their donations will be put to good use. As a not-for-profit organization, PHC is required to follow GAAP for private enterprises, as well as not-for-profit GAAP, effective January 1, 2012.
If you have any questions or concerns, feel free to contact us. We will begin by describing a little bit about General Funds and Capital Funds.
General Fund
We recommend this fund is where your assets and liabilities related to PHC’s operating activities be kept. ...view middle of the document...

Restricted Fun Method: Using the restricted fund method, the $30,000 would be recognized as revenue for the year ended August 31, 20X6 Income Statement. The $30,000 would be held in the Capital Fund, which can only be used for an air conditioning system. As with the Deferral Method, the pledges may or may not be entered into the financial statements. When and if these pledges are received, they would immediately be recognized as revenue.
Recommendation: We recommend that you use the Deferral Method; it will smooth out your Income Statements and provide better matching of expenses and costs than that of the Restricted Fund Method. It is also our recommendation to enter $22,500 into the Pledges Receivable account. Only after reviewing the history of other pledges made should this be entered. Should PHC find that 10% of past pledges were cancelled; then only $20,250(22,500*90%) would be entered into the Pledges Receivable account.
15-unit apartment building
In determining the method of accounting for the 15-unit apartment building, Perth Housing needs to take their annual revenues into account. Since their two year average revenues are greater than $500,000, the building should be capitalized. The entire $1,500,000 cost of the building, $1,125,000 + $375,000, should be capitalized and then amortized accordingly.
Rental Payments
Receiving late payments is a common problem for all types of businesses. To...

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