A private not-for-profit entity is working to create a cure for a deadly disease. The charity starts the year with one asset, cash of $700,000. Net assets without donor restrictions are $400,000. Net assets with donor restrictions are $300,000. Of the restricted net assets, $160,000 is to be held to buy equipment, $40,000 is to be used for salaries, and the remaining $100,000 must be held permanently. The permanently held amount is to be invested with 70 percent of any subsequent income used to cover advertising for fundraising purposes. The rest of the income is unrestricted. During the current year, this health care entity has the following transactions: a. Receives unrestricted cash gifts of $210,000. b. Pays salaries of $80,000, with $20,000 of that amount coming from purpose-restricted donated funds. Of the total salaries, 40 percent is for administrative personnel. The remainder is divided evenly among individuals working on research to cure the disease and individuals employed for fundraising purposes. c. Buys equipment for $300,000 by signing a long-term note for $250,000 and using restricted funds for the remainder. Of this equipment, 80 percent is used in research. The remainder is split evenly between administrative activities and fundraising. The donor of the restricted funds made no stipulation about the reporting of the equipment purchase. d. Collects membership dues of $30,000 in cash. Members receive a reasonable amount of value in exchange for these dues including a monthly newsletter that describes research activities. By the end of the year, 1/12 of this money had been earned. e. Receives $10,000 in cash from a donor. The money must be conveyed to a separate charity doing work on a related disease. f. Receives investment income of $13,000 from the permanently restricted net assets. g. Pays $2,000 for advertising. The money comes from the income earned in (f). h. Receives an unrestricted pledge of $100,000 that will be collected in three years. The entity expects to collect the entire amount. The pledge has a present value of $78,000. Related interest (considered contribution revenue) of $5,000 is earned prior to the end of the year. i. Computes depreciation on the equipment bought in (c) as $20,000. j. Spends $93,000 on research supplies that are used up during the year. k. Owes salaries of $5,000 at the end of the year. None of this amount will be paid from restricted net assets. Half of the salaries are for individuals doing fundraising, and half for individuals doing research. I. Receives a donated painting that qualifies as a museum piece being added to the entity's collection of art work that is being preserved and displayed to the public. The entity has a policy that the proceeds from any sold pieces will be used to buy replacement art. Officials do not want to record this gift if possible. Required: a. Prepare a statement of activities for this not-for-profit entity for the current year. b. Prepare a statement of financial position for this not-for-profit entity for the end of the current year. \begin{tabular}{|c|c|c|} \hline \multicolumn{3}{|c|}{ Statement of Activities } \\ \hline \multicolumn{3}{|c|}{ For the Year Ended December 31, 20XX } \\ \hline & \begin{tabular}{l} Net Assets \\ Without Donor \\ Restrictions \end{tabular} & \begin{tabular}{c} Net Assets With \\ Donor \\ Restrictions \end{tabular} \\ \hline \multicolumn{3}{|l|}{ Contributions } \\ \hline Contribution revenue & 210,000 & \\ \hline \multicolumn{3}{|l|}{ Contribution-interest } \\ \hline \multicolumn{3}{|l|}{ Earned revenue } \\ \hline \multicolumn{3}{|l|}{ Membership dues } \\ \hline \multicolumn{3}{|l|}{ Investment income } \\ \hline \multicolumn{3}{|c|}{ Net assets released from restrictions: } \\ \hline \multicolumn{3}{|l|}{ Satisfaction of donor restrictions } \\ \hline \multicolumn{3}{|c|}{ Total contributions and earned revenue } \\ \hline \multicolumn{3}{|l|}{ Expenses } \\ \hline \multicolumn{3}{|c|}{ Program service expensesCure disease } \\ \hline \multicolumn{3}{|l|}{ Salaries } \\ \hline \multicolumn{3}{|l|}{ Depreciation } \\ \hline \multicolumn{3}{|l|}{ Supplies } \\ \hline Total & 0 & 0 \\ \hline \multicolumn{3}{|c|}{ Supporting service expenses - General and administrative } \\ \hline \multicolumn{3}{|l|}{ Salaries } \\ \hline \multicolumn{3}{|l|}{ Depreciation } \\ \hline Total & 0 & 0 \\ \hline \multicolumn{3}{|l|}{ Fundraising } \\ \hline \multicolumn{3}{|l|}{ Salaries } \\ \hline \multicolumn{3}{|l|}{ Advertising } \\ \hline \multicolumn{3}{|l|}{ Depreciation } \\ \hline Total & 0 & 0 \\ \hline Total Expenses & 0 & 0 \\ \hline \multicolumn{3}{|l|}{ Change in Net Assets } \\ \hline \multicolumn{3}{|l|}{ Net Assets - Beginning of Year } \\ \hline Net Assets - End of Year & $ & $ \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|c|} \hline \multicolumn{6}{|c|}{ Statement of Financial Position } \\ \hline \multicolumn{6}{|c|}{ December 31,20XX} \\ \hline Assets & & & & & \\ \hline Cash & & $ & 738,000 & & \\ \hline Pledge Receivable & & & 83,000 & & \\ \hline Equipment & $300,000 & & & & \\ \hline Accumulated Depreciation & (20,000) & & 280,000 & & \\ \hline Total Assets & & & & $ & 1,101,000 \\ \hline \multicolumn{6}{|l|}{ Liabilities } \\ \hline Salaries Payable & & $ & 5,000 & & \\ \hline Notes Payable & & & 250,000 & & \\ \hline Deferred Revenue & & & 27,500 & & \\ \hline Donated Amount Due to Separate Entity & & & 10,000 & & \\ \hline Total Liabilities & & & & $ & 292,500 \\ \hline \multicolumn{6}{|l|}{ Net Assets } \\ \hline Without Donor Restrictions & & $ & 488,400 & & \\ \hline With Donor Restrictions & & & 320,100 & $ & 808,500 \\ \hline \end{tabular} Required A Required B