Question

INVOLVE was incorporated as a not-for-profit voluntary health and welfare organization on January 1, 2017. During the fiscal year ended December 31, 2017, the following transactions occurred.

1.	A business donated rent-free office space to the organization that would normally rent for $35,700 a year.
2.	A fund drive raised $188,500 in cash and $107,000 in pledges that will be paid within one year. A state government grant of $157,000 was received for program operating cost related to public health education.
3.	Salaries and fringe benefits paid during the year amounted to $209,260. At year-end, an additional $16,700 of salaries and fringe benefits were accrued.
4.	A donor pledged $107,000 for construction of a new building, payable over five fiscal years, commencing in 2019. The discounted value of the pledge is expected to be $94,960.
5.	Office equipment was purchased for $12,700. The useful life of the equipment is estimated to be 4 years. Office furniture with a fair value of $10,300 was donated by a local office supply company. The furniture has an estimated useful life of 10 years. Furniture and equipment are considered unrestricted net assets by INVOLVE.
6.	Telephone expense for the year was $5,900, printing and postage expense was $12,700 for the year, utilities for the year were $9,000 and supplies expense was $5,000 for the year. At year-end, an immaterial amount of supplies remained on hand and the balance in accounts payable was $4,300.
7.	Volunteers contributed $15,700 of time to help with answering the phones, mailing materials, and various other clerical activities.
8.	It is estimated that 80 percent of the pledges made for the 2018 year will be collected. Depreciation expense is recorded for the full year on the assets recorded in item 5.
9.	Salaries and wages, and other expenses (except for the provision for uncollectible accounts which is allocated 100 percent to fund-raising) were allocated to program services and support services in the following percentages: public health education, 40 percent; community service, 20 percent; management and general, 20 percent; and fund-raising, 20 percent.
10.	Net assets were released to reflect satisfaction of state grant requirements that the grant resources be used for public health education program purposes.
11.	All nominal accounts were closed to the appropriate net asset accounts.

Required
a.	Prepare journal entries to record these transactions. Expense transactions should be initially recorded by object classification; in entry 10 expenses will be allocated to functions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Round the intermediate and final answers to the nearest dollar amount.)

b.	Prepare a statement of activities for the year ended December 31, 2017. (Negative amounts should be indicated by a minus sign. Round the intermediate and final answers to the nearest dollar amount.)

Answer 1

DATE	TITLES AND TRANSACTIONS	DEBIT	CREDIT
	OFFICE SPACE	35700
	DONATION RECIEVED		35700
	CASH	188500
	PLEDGES	107000
	FUNDS		295500
	TEMPORARILY RESTRICTED NET ASSETS	157000
	GOVERMENT GRANT (FOR PUBLIC HEALTH PROG.) OBLIGATION		157000
	SALARIES AND FRINGE BENEFITS	225960
	CASH		209260
	SALARIES AND FRINGE BENEFITS OBLIGATONS		16700
	PLEDGE FOR BUIDING	94960
	DONATION RECIVABLE		94960
	OFFICE EQUIPMENT	12700
	OFFICE FURNITURE	10300
	CASH		12700
	DONATION		10300
	DEPRICATION ON OFFICE EQUIPMENT	3175
	DEPRICATION ON OFFICE FURNITURE	1030
	OFFICE EQUIPMENT		3175
	OFFICE FURNITURE		1030
	TELEPHONE EXPENSES	5900
	PRINT AND POSTAGE EXP.	12700
	UTILITIES	9000
	SUPPLIES	5000
	CASH		28300
	ACCOUNTS PAYABLE		4300
	CLERICAL ACTIVITES EXPENSES	15700
	CONTRIBUTION FROM VOLUNTEERS		15700
	REDUCTION IN PLEDGE	21400
	PLEDGES		21400
	UNRESTRICTED NET ASSETS (OFFICE ASSET+EXP.)	183351
	TEMPORARILY RESTRICTED NET ASSETS	109704
	OFFICE EQUIPMENT(NET)		9525
	OFFICE FURNITURE(NET)		9270
	SALARIES AND FRINGE EXP		225960
	TELEPHONE EXP		5900
	PRINT AND POSTAGE		12700
	UTILITIES		9000
	SUPPLIES		5000
	CLERICAL ACTIVTIES EXPENSES		15700
	EXPLANATION: THE OFFICE FUR. &EQUIP ARE UNRESTRICTED ASSETS GIVEN CLEARLY. THE EXPENSES ALLOCATION % ARE GIVEN, BY APPLYING THIS% WE WILL CLASSIFIED EXPENSES IN NET ASSETS. TOTAL EXPENSES ARE 274260 (SALARIES TO CLERICAL EXP.) 40% TO TEMPORARILY RESTRICTED NET ASSETS AS RELATED TO GOVT. GRANT REQUIREMENTS, 60% ARE UNRESTRICTED NET ASSETS USED IN DAILY OPERATIONS.
10	PUBLIC HEALTH EDUCATION PROGRAM EXPENSES	157000
	TEMPORARILY RESTRICTED NET ASSETS		157000
	PERMANANT RESTRICTED NET ASSETS	405660
	OFFICE SPACE		35700
	CASH		188500
	PLEDGE		86500
	PLEDGE FOR BUILDINGS		94960

STATEMENT OF ACTIVITIES
REVENUES	WITH DONOR RESTRICTION	WITHOUT DONOR RESTRICTION
DONATION FOR OFFICE SPACE		35700
GRANT	157000
PLEDGES	94960	86500
CASH DONATION		188500
NET ASSETS RELESED	157000                    -157000
EXPENSES		-274260