(Journal entries for restricted funds and General Fund)

The not-for-profit West Street Hospital had the following transactions during 2004:

1. A gift of $\$ 100,000$ was received from Warso Stores. The terms of the gift specified that the principal amount (and any appreciation from fund investments) must be maintained intact permanently. The income could be spent for any purpose that would help the hospital. The total amount of the gift was immediately invested in marketable securities.

2. First Construction Company gave the hospital a grant of $\$ 500,000$ for cancer research. The proceeds from the grant were invested in marketable securities.

3. Paigekat Company donated $\$ 200,000$ to the hospital for the construction of a building addition that would be devoted to dealing with mental patients.

4. Architectural fees for the building addition for the mental health unit were paid in cash, $\$ 30,000$. The remainder of the Paigekat gift was invested in marketable securities.

5. During the year, the hospital began a fund-raising drive for the mental health unit. Pledges totaling $\$ 200,000$ and cash donations totaling $\$ 30,000$ were received. (Hint: Record the pledges as receivables.)

6. Investment income of $\$ 30,000$ was received in cash on the First Construction Company Fund investments. In addition, $\$ 20,000$ of investments matured. The hospital paid face value when purchasing these securities. Assume that the investment income is restricted in the same way as the original grant.

7. Cancer research costs of $\$ 45,000$ were incurred and paid by the General Fund. The First Construction Company Fund reimbursed the General Fund for these expenditures.

8. Income of $\$ 8,000$ was earned by the Warso Stores Fund investments. Of this amount, $\$ 7,000$ was received in cash.

9. Collections of pledges during the year totaled $\$ 80,000$.

10. At year-end, the fair value of the investments held in the Warso Stores Fund was $\$ 108,000$.

Required: 1. Prepare all the journal entries necessary to record these transactions in the restricted funds and the General Fund of the West Street Hospital and identify each fund used.

2. Prepare a statement of changes in net assets for the temporarily and permanently restricted net assets for 2004.