Case 4.2: Rain Shadow Meals on Wheels
Rain Shadow Meals on Wheels (i.e. “Rain Shadow”) prepares and delivers hot meals to senior citizens. Its fiscal year is January-December. At the end of fiscal year 2018, it had the following ending balances for its assets, liabilities, and net assets.
| ACCOUNT | FY 2018 |
| ENDING BALANCE | |
| Cash | $208,500 |
| Accounts Payable | $75,000 |
| Accounts Receivable | $50,000 |
| Pledges Receivable | $10,000 |
| Pre-Paid Expenses | $0 |
| Note Payable | $8,000 |
| Deferred Revenue | $1,000 |
| Inventory | $75,000 |
| Property Plant & Equipment | $100,000 |
| Long-Term Investments | $1,000,000 |
| Net Assets with Donor Restrictions | $1,004,500 |
| Wages Payable | $5,000 |
Using the worksheet below and the chart of accounts for the ending balances listed above, record these transactions for Rain Shadow during fiscal year 2019:
- On January 2, 2019, Rain Shadow purchased $100,000 of new food preparation equipment. It was paid with cash.
- On January 10, 2019, Rain Shadow paid $15,000 for a full year of insurance on its food preparation/distribution facility.
- On January 15, 2019, Rain Shadow paid $5,000 in wages employees earned in the final pay period of 2018.
- In November 2018, a local community foundation donated $2,500 for a nutrition education program that Rain Shadow agreed to deliver in early 2019. On February 1, 2019, Rain Shadow delivered that program. To deliver that program, it paid $2,000 to an outside consultant and used $500 of inventory.
- On April 1, 2019, Rain Shadow concluded its first quarter fundraising drive. It received $50,000 in cash donations and $100,000 in pledges. Historically, 90 percent of pledges have been collected.
- On July 12, 2019, Rain Shadow paid its suppliers and vendors $25,000.
- On July 15, 2019, Rain Shadow purchased inventory valued at $10,000 and received invoices from its suppliers.
- On September 1, 2019, a local wholesale food distributor donated $2,000 of supplies. Rain Shower used that food to prepare meals.
- On November 10, 2019, a local adult day services center paid Rain Shadow $5,000 for a nutrition education program. Rain Shadow will deliver that program in early 2020.
- On December 10, 2019, Rain Shadow’s investment manager reported that long-term investments are now valued at $1,050,000. Rain Shadow had received interest and dividend income from its investments of $35,000. All income from investments would be used to support general operations.
- Through December 31, 2019, Rain Shadow used $80,000 of labor. All wages were paid in cash.
- Depreciation expense totaling $20,000 was recorded on December 31, 2019.
Using the chart of accounts, the following Excel template file (https://bit.ly/3Pe3f5K) and transactions for the year ended December 31, 2019, to prepare the Statement of Financial Position and Statement of Activities for the year ended December 31, 2019.
