11 Case 4.3: St. Katherine’s Therapeutic Riding Center
The St. Katherine’s Therapeutic Riding Center, a non-profit horse farm and riding center whose mission is to “bolster the confidence of developmentally disabled youth through the riding and tending of horses,” began FY 2020 on July 1, 2019. On June 30, 2019 (the last day of FY 2019), it had the following account balances.
| ACCOUNT BALANCES | ENDING BALANCE FY 2019 |
| Property and Equipment | $296,000 |
| Note Payable | $34,500 |
| Marketable Securities | $164,500 |
| Accounts Payable | $13,000 |
| Pre-Paid Expenses | $500 |
| Accounts Receivable | $7,500 |
| Inventory | $4,500 |
| Long-Term Investments | $450,000 |
| Pledges Receivable | $6,250 |
| Cash | $115,000 |
| Wages Payable | $0 |
| Net Assets with Donor Restrictions | $456,000 |
| Grant Receivable | $2,000 |
| Deferred Revenue | $4,000 |
Using the worksheets below and the chart of accounts listed above, execute the following transactions and prepare a Statement of Financial Position, Statement of Activities, and Statement of Cash Flows for St. Katherine’s Therapeutic Riding Center for the year ending June 30, 2020.
- On July 2, St. Katherine’s renewed memberships to professional associations for the Executive Director and Outreach Coordinator for FY 2020. Professional membership was at a cost of $1,000 and was paid in full at the time of renewal.
- On July 10, St. Katherine’s received an anonymous pledge of $50,000 to support free riding lessons for children from a nearby Boys and Girls Club. On July 20, the donor delivered the pledge in full.
- On August 10, a local equine trainer donated equipment with a current market price of $3,000 and completed a pro bono training for St. Katherine’s staff on best practices in horse training and nutrition. That training is typically offered to paying clients for $2,500. The equipment is expected to have a useful life of five years and no salvage value. Staff recognized depreciation on the donated equipment beginning September 1, 2019.
- On September 15, St. Katherine’s hosted its fundraising dinner and raised $50,000 in cash and $250,000 in pledges. Historically, St. Katherine’s has been able to collect 95 percent of the pledges made to the organization.
- On October 15, St. Katherine’s deposited two checks of $2,750 and $2,000. The checks were payments for services delivered to the Boys and Girls Club and an outstanding balance on a grant from the city, respectively.
- On November 3, St. Katherine’s signed an agreement with a local marketing firm that revamped the non-profit’s online presence, including developing a social media strategy and an online donation platform. The marketing company will bill at a rate of $300/hour for 40 hours of work.
- On December 1, St. Katherine’s had to purchase new equipment worth $100,000 using an unsecured note from Local Bank, NA. The new equipment has a useful life of eight years and a salvage value of $15,000.
- On January 1 (the first day of the second half of the year), St. Katherine’s investment managers reported that they sold marketable securities with a book value of $75,000 for $95,000. They also reported that marketable securities previously reported at book value of $40,000 had declined in value during the first quarter to $35,250. On March 1, St. Katherine’s received $28,000 in interest and dividend payments related to its long-term investments. All investment income would be used to support the general operations of the riding center.
- On April 15, the staff reported they had delivered the riding lessons with children from the nearby Boys and Girls Club. Their efforts had been supported by funds from an anonymous donor (see (2) above).
- For the year ending June 30, 2020, employee salaries and benefits were $186,000. Of that total, $15,500 remained unpaid at the end of the year. Fundraising and marketing expenses for the year were $14,000. All fundraising and marketing expenses had been paid in full by year-end. Expenses for supplies for the farm were $35,500 for the year, and these had also been paid in full by year-end.
- On June 30, St. Katherine’s made $12,250 in payments on the $100,000 loan from Local Bank, NA. Of the total, $10,000 was a payment against the outstanding principal, and $2,250 was interest expense.
To complete this exercise, download the St. Katherine Worksheet: https://bit.ly/3PBSKKU. Using the chart of accounts and transactions listed above, prepare a Statement of Financial Position, Statement of Activities, and Statement of Cash Flows for St. Katherine’s Therapeutic Riding Center for the year ended June 30, 2020.
