The newly established Society for Ethical Teachings, a notforprofit organization, maintains two fundsa general fund for operations and a building fund to accumulate resources for a new building. In its first year, it engaged in the following transactions:

1. It received cash contributions of $450,000, of which $50,000 were restricted to the acquisition of the new building.
2. It incurred operating costs of $220,000, of which it paid $150,000 in cash
3. It earned $15,000 of interest (the entire amount received in cash) on resources restricted to the acquisition of the new building.
4. It transferred $25,000 from the operating fund to the new building fund.
5. It paid $22,000 in fees (accounted for as expenses) to an architect to draw up plans for the new building.

Request:

a. Prepare journal entries to record the transactions. Be certain to indicate the fund in which these entries would be made.

b. Prepare a statement of revenues, expenses, and other changes in fund balance and a balance sheet. Use a twocolumn format, one column for each of the funds. Note that for purposes of external reporting notforprofits would not generally prepare statements on a fund basis. Instead, consistent with the requirements of the FASB, they would consolidate their funds into three categories of restrictiveness: unrestricted, temporarily restricted, and permanently restricted.