Big Bucks (BB) is an association formed in 2013 by wealthy individuals wanting to network with other wealthy individuals. An individual applies to be a member in the association and must supply financial data indicating their net worth. The board of directors decides admission based on criteria established. A member of the BB association has access to the coordinates of the other members, is provided with a webpage about them, participates in events that are exclusive to its members, and receives the monthly newsletter. The organization is funded largely by private donations from large family foundations. Membership in the association has a certain elite appeal. During 2013, the following transactions occurred:

1. BB received $2 million from a family foundation as seed money to start the website. BB has hired a programmer who has started work on the site. The total cost of the job is $575,000 and to date, the programmer has charged $235,000.

2. BB has an office in a building owned by one of its starting members, who is also a member of the board of directors. BB is not paying any rent for the office. Under normal circumstances, these premises would rent for $50,000/month.

3. Another member has agreed to loan her collection of art to BB to display in the offices. BB will own the art as long as it continues to exist. Should the association fold, the art will revert to the member's family. The art has not been evaluated in many years but in 1985 it was appraised at $13.5 million.

4. The director of the association is paid biweekly for an annual salary of $50,000.

5. Membership in BB is $10,000 annually with an additional initiation fee of $50,000. In its first year, BB attracted 300 members. All fees must be paid immediately.

6. BB held one major event during the year to introduce all the members to each other. The event cost $60,000 and the revenues from tickets received were $100,000. A raffle was also held during the event for a Porsche automobile that was donated. The Porsche was appraised at $150,000. BB raised $200,000 from the raffle.

7. BB uses fund accounting and the restricted fund method for each fund that requires restrictions. The restricted funds are the endowment funds and the capital funds. BB also has a separate fund for the major event held.

8. BB secured a major endowment of $3.2 million on July 1, 2013, in the form of shares of TST Inc., a public company controlled by one of the members in the association. The original cost of these shares was $1,000. The shares cannot be sold for 10 years but BB can use any dividends paid at its discretion. In 2013, BB received $20,000 in dividends on these shares.

Required

(a) Prepare the journal entries that BB would make in 2013.

(b) Prepare the financial statements for BB as at December 31, 2013.