NP Inc is an NFPO that was formed at the beginning of 20X7 when its founder made a substantial contribution under the condition that only the interest earned from the money that she donated could be spent on operations The remainder of the necessary funds were to come from government grants and donations from the general public A board of directors was appointed and immediately launched two fundraising campaigns one for daily operations, and the other to raise funds to acquire a small building The directors propose to report externally using the deferred contribution method and to set up an accounting system on that basis The following summarizes some of the transactions that were made in 20X7 The founders original contribution (discussed above) amounted to $700,000 This money was immediately invested in marketable securities The founder donated $8,500 for office equipment The office equipment was purchased for $8,500 A public campaign to raise funds for daily operations was held at the beginning of the year Cash of $200,000 was collected, and pledges of $150,000 were received It is estimated that approximately 10 of these pledges will be uncollectible Total fundraising costs for the operating campaign were $89,000, of which $22,750 is still owing Government grants were announced as follows For 20X7 operations $290,000 For building acquisition 95,000 The entire building grant was received, as was 95 of the operating grant, with the balance promised very early in 20X8 Invoices totaling $615,225 were received These invoices were allocated 55 to Program A, 20 to Program B, and 25 to administration None have been paid by year end The marketable securities earned revenues amounting to $63,000 during the year 70 of this had not been received by year end The first years depreciation on the office equipment amounted to $850 Required Prepare the journal entries necessary to reflect the 20X7 events described above, using the deferral method of accounting for contributions

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NP Inc. is an NFPO that was formed at the beginning of 20X7 when its founder made a substantial contribution under the condition that only

NP Inc. is an NFPO that was formed at the beginning of 20X7 when its founder made a substantial contribution under the condition that only the interest earned from the money that she donated could be spent on operations. The remainder of the necessary funds were to come from government grants and donations from the general public. A board of directors was appointed and immediately launched two fundraising campaigns: one for daily operations, and the other to raise funds to acquire a small building. The directors propose to report externally using the deferred contribution method and to set up an accounting system on that basis.

The following summarizes some of the transactions that were made in 20X7:

The founder’s original contribution (discussed above) amounted to $700,000. This money was immediately invested in marketable securities.
The founder donated $8,500 for office equipment.
The office equipment was purchased for $8,500.
A public campaign to raise funds for daily operations was held at the beginning of the year. Cash of $200,000 was collected, and pledges of $150,000 were received. It is estimated that approximately 10% of these pledges will be uncollectible.
Total fundraising costs for the operating campaign were $89,000, of which $22,750 is still owing.
Government grants were announced as follows:
- For 20X7 operations $290,000
- For building acquisition 95,000
The entire building grant was received, as was 95% of the operating grant, with the balance promised very early in 20X8.
Invoices totaling $615,225 were received. These invoices were allocated 55% to Program A, 20% to Program B, and 25% to administration. None have been paid by year-end.
The marketable securities earned revenues amounting to $63,000 during the year. 70% of this had not been received by year-end.
The first year’s depreciation on the office equipment amounted to $850.

Required:

Prepare the journal entries necessary to reflect the 20X7 events described above, using the deferral method of accounting for contributions.