Geneva Preschool provides free instruction for children from low-income families. Its January 1, 2023, trial balance is as follows:

	Debit	Credit
Cash	$ 100,000
Equipment & furnishings, net	1,500,000
Building, net	3,500,000
Accounts payable		$ 200,000
Net assets without donor restrictions		3,400,000
Net assets with donor restrictions		1,500,000
	$5,100,000	$5,100,000

Activities for 2023: a. Unrestricted cash contributions were $4,500,000. b. On January 1, 2023, a donor made a documented promise of $500,000, to be paid at the end of 2025 (3 years later). The donor restricts this contribution to support of music-related programs. Using a 5 percent discount rate, the present value of this promise is $431,918. c. Each year, Geneva collects donor-restricted contributions to purchase technology for educational programs. During 2023, $200,000 was received and $500,000 was spent. Geneva expenses technology purchases. d. Out-of-pocket operating expenses for the year were $4,200,000. The year-end accounts payable balance, all related to operating expenses, was $150,000. e. A licensed CPA did all of Geneva's required financial statements and IRS forms for free. Fair value of these services is $25,000. Parents of students donated their time to lead preschool classes in safety and nutrition. The fair value of their time is $5,000. f. Depreciation for the year on equipment and furnishings was $250,000. Depreciation on the building was $600,000.

How do Geneva's 2023 financial statements report the out-of-pocket operating expenses described in item d above?

$4,350,000 reduction in net assets without restrictions

$4,200,000 reduction in net assets without restrictions

$4,350,000 reduction in net assets with restrictions

$4,200,000 reduction in net assets with restrictions