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