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:

  1. On January 2, 2019, Rain Shadow purchased $100,000 of new food preparation equipment. It was paid with cash.
  2. On January 10, 2019, Rain Shadow paid $15,000 for a full year of insurance on its food preparation/distribution facility.
  3. On January 15, 2019, Rain Shadow paid $5,000 in wages employees earned in the final pay period of 2018.
  4. 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.
  5. 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.
  6. On July 12, 2019, Rain Shadow paid its suppliers and vendors $25,000.
  7. On July 15, 2019, Rain Shadow purchased inventory valued at $10,000 and received invoices from its suppliers.
  8. On September 1, 2019, a local wholesale food distributor donated $2,000 of supplies. Rain Shower used that food to prepare meals.
  9. 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.
  10. 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.
  11. Through December 31, 2019, Rain Shadow used $80,000 of labor. All wages were paid in cash.
  12. 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.

License

Icon for the Creative Commons Attribution 4.0 International License

Financial Strategy for Public Managers Copyright © 2023 by Sharon Kioko and Justin Marlowe is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.