Moore Art Association, a not-for-profit entity, received a series of pledges in January of Year One (the beginning of its fiscal year) totaling $10 million. The organization adheres to FASB Statement No. 116 guidelines related to pledge revenue and receivable recognition. Further, Moore is a mature entity with ample historical experience related to the collectability of pledges. Based upon this experience, Moores CFO believes that 70% of the year one pledges will be collected within the first year. She estimates that Moore will be able to collect 70% of year one the pledges by year end and that 20% of the remaining pledges will not be collectible in year two. Given this information, what is the amount which the CFO should record related to the pledges expected to be collected in the first year and into which fund?

Debit $10 Million Pledges Receivable, Credit Pledge Revenue (Restricted Fund)

Debit $7 Million Pledges Receivable, Credit Pledge Revenue (Unrestricted Fund)

Debit $9,612,000 Pledges Receivable, Credit Pledge Revenue (Unrestricted Fund)

Debit $9,612,000 Pledges Receivable, Credit Deferred Revenue (Restricted Fund)