Red Hart Retreat was established as a not-for-profit organization several years ago to provide counselling services for troubled youth.It has since expanded its programs to include counselling services for adults.The organization uses fund accounting with an operating fund and a restricted fund for the adult counselling program which has been funded by grant from a charitable foundation.

Following is the balance sheet of Red Hart Retreat as at December 31, 2015:

During 2015, a donor had contributed $20,000, the use of which was restricted to the purchase of equipment.Another donor had contributed $30,000 to be used only to provide grants to youth receiving counselling to enable them to participate in team sports.

You have obtained the following schedule of receipts and disbursements from the organization's founder, Roxy Cordoba.

Roxy has also provided the following additional information:

Red Hart Retreat sold the investments on hand at the beginning of the year in late January.

The provincial government agreed to provide an annual grant equal to 70% of all expenses of the youth counselling program, to a maximum of $200,000 per year.During 2016, the balance receivable at the end of 2015 was received, as well as advances of $10,000 per month against the amount receivable for 2016.To maximize the grant revenue, the board of directors decided to expense all capital additions and to record the value of donated goods and services whenever possible.

The charitable foundation which funded the adult counselling program granted another $100,000 for the costs of that program in 2017.This money was received late in the year and invested in short term investments until it would be needed next year.There was no change in the value of this investment at the year-end.

Of the $110,000 in donations from individuals and businesses, $15,000 was restricted to the sports grants discussed above.In addition, $25,000 was restricted to use in the adult counselling programs.

On July 1, 2016, a donor contributed a donation of $250,000, to be invested with the investment income to be used as the board of directors determined, subject to maintaining the purchasing power of the endowment against inflation.Inflation during 2016 was at the annual rate of 4%.The endowment investments were in fixed income securities and there was no change of value from the time they were acquired to the year-end.On receipt of the endowment donation, Red Hart Retreat established an Endowment Fund.

Accounts payable at the end of 2016 amounted to $8,000 for the youth counselling programs and an additional $3,000 for the adult counselling programs.

All the equipment purchases were used in the youth counselling program and were paid for from the restricted contributions.Sports grants of $20,000 are include in the operating costs of the youth counselling program.

The foundation making the grant required audited financial statements.A chartered professional accountant audited the financial statements and donated his services to the organization.The audit would have otherwise cost $10,000.

Required:

Prepare journal entries to record the activities of Red Hart Retreat for 2016. Be sure to indicate to which fund each entry will be posted.

Operating Adult Total Fund Counselling Fund Cash S 67,600 $ 10,000 $ 77,600 Grant receivable 6,000 6,000 Marketable securities 104,000 104,000 $ 73,600 114,000 $ 187,600 Accounts payable S 5,000 S 4,000 S 9,000 Deferred contributions -- equipment purchases 14,000 14,000 -- sports grants 20,000 20,000 Net assets -- unrestricted 34,600 34, 600 -- restricted 110,000 110,000 S 73,600 $ 114,000 $ 187,600Cash receipts: Proceeds from sale of investments Donations from individuals and businesses Endowment donation Investment income from endowment investments Grant from the provincial government Foundation grant for adult counselling program Investment income from investment of donations for adult counselling program Cash disbursements: Equipment purchases Operating costs -- youth counselling programs Operating costs -- adult counselling programs Investment of endowment donation Payment of last year's accounts payable Investment of foundation grant Increase in bank balance for the year 106,000 110,000 250, 000 15,000 126,000 100,000 1,000 10,000 180,000 102,000 250,000 9,000 100, 000 708,000 651,000 57,000