It has been a hectic year at Abdalla Lodge. In January 20X4, Myesha Kind incorporated Abdalla as a not- for- profit organization. Its mandate is to provide counselling services for troubled youth. During the year, the organization organized a fundraising drive, signed a 10- year lease for office space, and commenced offering services to the public. The organization looks forward to many years of improving the lives of troubled youths in the community. The office space was found in a rundown building in an older area of Smallville. Most of the town’s poorest people live in this area of town. Abdalla took possession of the space on April 1, 20X4, and completed leasehold improvements by June 30, 20X4, at a cost of $ 30,000. On July 2, 20X4, Myesha opened the doors for business. She took on the job of director of the organization at an annual salary of $ 48,000. However, she worked July and August of 20X4 for free. On September 1, 20X4, two social workers were hired to meet the demands of the growing organization. It is now December 20X4. You, CGA, have been asked by Myesha to prepare the financial statements for Abdalla for the 10- month period ending October 31, 20X4. Myesha provided the following schedule of cash receipts and disbursements:Cash receipts Donations from individuals and businesses … $ 60,000Grant from provincial government ………………………………….. 70,000 130,000Cash disbursements Leasehold improvements ………………….. 30,000Furniture and equipment ………………………………………………… 24,000Rent ………………………………………………… …………………………. 10,500Office supplies ……………………………………………………………….. 5,000Wages and benefits ……………………………………………………….. 28,000Other expenses ……………………………………………………………….. 8,500 106,000Cash on hand at October 31, 20X4 …………………………………. $ 24,000Of the $ 60,000 received from individuals and businesses, $ 10,000 was designated for the purchase of furniture and equipment and $ 15,000 was designated for the purpose of hiring a program director in 20X5. The remaining funds were unrestricted. The provincial government agreed to provide an annual grant equal to 70% of all expenses to a maximum of $ 200,000 a year. To maximize the grant received from the provincial government, Myesha wants to record the value of all donated goods and services and to claim the full cost of the leasehold improvements and furniture and equipment in the year when these assets are acquired. The furniture and equipment is expected to have a useful life of five years. Revenue is to be recognized using the deferral method. At the end of October 20X4, $ 3,000 of wages and benefits had been earned but not yet paid for and $ 1,000 was owing for other expenses. RequiredPrepare a statement of operations and a statement of financial position for the 10- month period ended October 31, 20X4. Show supporting calculations. View Solution:
It has been a hectic year at Abdalla Lodge In