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Hello All,
Can someone please explain the following question to me.
For the fall semester of Year 1, Ames University assessed its students $3,000,000 for tuition and fees. The net amount realized was only $2,500,000 because scholarships of $400,000 were granted to students, and tuition remissions of $100,000 were allowed to faculty members’ children attending Ames. What amount should Ames report for the period as unrestricted current fund gross revenues from tuition and fees?
a.$2,600,000
b.$2,500,000
c.$3,000,000
d.$2,900,000
Choice “c” is correct. Revenues from tuition and fees are reported at the gross amount. Only refunds are netted against the revenue. Scholarships and tuition remissions are shown separately as expenditures. The journal entry would be:
Debit (Dr) Credit (Cr)
Cash $ 2,500,000
Expenses – scholarships 400,000
Expenses – tuition remission 100,000
Revenues – tuition and fees $ 3,000,000
Why scholarships and tuition fees are included in revenue. Shouldn’t they be subtracted since both of them are expenses for us?
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