11) The American Association for Freedom, a political think tank, was recently established. During its first year of operations (beginning January 1), it engaged in the following transactions and was affected by the following events (in summary form): i. It received a $10,000,000 endowment contribution from a donor, all in stocks and bonds. ii. It received $3,000,000 in additional contribution, all restricted for its educational programs and $2,300,000 in contributions without donor restrictions. iii. It acquired $800,000 in furniture, fixtures, and equipment, all of which have an expected useful life of 10 years. iv. It recognized one years straight-line depreciation expense for its furniture, fixtures, and equipment. v. It spent $2,400,000 on educational programs. To fund the programs, the organization used $400,000 of general unrestricted cash and $2,000,000 from prior donor restricted contribution. vi. It earned $300,000 in interest and dividends on its endowment investments. vii. At the end of the year, its endowment investments has appreciated by $600,000. viii. Paid $1,300,000 in cash for administrative expenses. ix. Near year-end, it received a restricted pledge of $4,500,000 to be fulfilled in three annual installments of $1,500,000 beginning in one year. The Association determined that a discount rate of 6 percent was appropriate. a) Prepare journal entries to record these events and transactions. Be sure to indicate the fund type in which the entry would be made: i. Fund Type: ii. Fund Type: Fund Type: iii.

Fund Type: iv. Fund Type: v. Fund Type: Fund Type: vi. Fund Type: vii. Fund Type: viii. Fund Type: ix. Fund Type: b) Prepare a year-end statement of activities: STATEMENT OF ACTIVITIES Without Donor Restriction With Donor Restriction Total Revenues Contributions Investment Income Total Revenues Expenses

Programs (education) Admin (incl depreciation) Total Expenses Excess of Revenue over Expenses Net assets released from restriction Increase in net assets c) Prepare a year-end statement of financial position: STATEMENT OF FINANICAL POSITION Cash Pledges Receivable Investments Furniture, Fixtures and equipment Less: Accumulated depreciation Total Assets Net Assets Without donor restrictions With donor restrictions Restricted for time or purpose Restricted in perpetuity Total Net Assets