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Problem 12-1
Part a. Journal entries
Transaction #5
• Please assume in #5 that the cash for the educational expenses came from the following sources: $2,000,000 from restricted net assets $400,000 from unrestricted net assets
Transaction #9
• Assume that the pledge is to be received in annual installments of $1,500,000 at the end of each of the next three years.
• In other words, use the PV factor for an annuity of three periods at 6% to value the amount of the pledge.
American Association of Freedom
Statement of Activities
UnrestrictedTemporarily Restricted
Permanently Restricted Total
Revenues
Contributions
Investment Income
Total Revenues
Expenses
Programs (education)
Administration
Depreciation
Total Expenses
Excess of revenue over expenses
Resources released from restriction
Increase in net assets $1,420,000 $16,429,518
American Association for Freedom
Statement of Financial Position
Assets
Cash
Pledges receivable 4,009,518
Investment
Furniture, fixtures, and equipment 800,000
Less: Accumulation Depreciation 80,000 720,000
Total Assets 16,429,518
Net Assets
Unrestricted
Temporarily restricted
Permanently restricted
Total net assets
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