Wings is a not-for-profit organization dedicated to the promotion of flying in youths. It owns a number of airplanes at various airports which it uses to provide introductory flights in order to encourage young adults to pursue flight training lessons and possible careers as commercial airline pilots. At the end of last year, Wings reported the following trial balance:

DR CR.

Cash $216,000

Investments $2,880,000

Contributions receivable $624,000

PPE & Equip,Net $1,440,000

Payables $480,000

Long-Term Liabilities $960,000

Net-Assets-w/o donor restrictions $1,920,000

Net Assets - w/donor restrictions $1,800,000

$5,160,000 $5,160,000

At year-end, the investments are allocated as follows:

Investment-Without Donor Restrictions - 40%

Investment-With Donor Restrictions - 60%

These investments earn a 5% cash return during the following year.

During the following year, Wings received $3,360,000 of unrestricted donations and $390,000 of donations whose use is restricted by donors as to use. All contributions are on account when made.

Program and support expenses for the current year are $3,120,000 and $444,000, respectively, both on account. Of the program expenses, $240,000 are funded from restricted funds as they are used for approved expenditures. During the year, Wings purchased an airplane for a cash purchase price of $348,000 and recorded depreciation expense on existing depreciable assets of $108,000 (90% of which is allocated to program expenses and 10% of which is allocated to support expenses). The organization purchased additional investments with excess cash in the amount of $144,000 and also repaid $138,000 principal amount of long-term debt. Finally, during the year, the organization collected $3,600,000 of contributions receivable and paid $3,480,000 of accounts payable.

1. Prepare journal entries for the organizations financial activities during the year.

General Journal

DR CR

Cash

Contributions receivable

Support-contributions (without donor restrictions)

Revenues-investment (without donor restrictions)

Revenues-investment (with donor restrictions)

To record recognition of support and revenues.

Net assets released from restrictions-with donor restrictions

Net assets released from restrictions-without donor restrictions

To release net assets from restrictions.

Expenses - program

Expenses -support

Cash

To record purchase of long-term assets and recognize depreciation.

Investments

Cash

To record purchase of investments

Long-term debt

Cash

To record payment on debt.

Cash

Payables

Contributions on receivable

B. Prepare the year-end statement of activities and statement of financial position.

Statement of Activities

Without donor Restrictions With donor Restrictions Total

Support Contributions

Revenues - Investment

Net Assets Released from from restrictions

Total support and revenue

Expenses-program

Expenses -support

Total expenses

Change in net assets

Net assets beginning of year

Net assets end of year

Statement of Financial Position

Investments

Contributions receivable

Total current assets

Property plant and equipment, net

Total assets

Cash overdraft

Total current liabilities

Long-term liabilities

Total liabilities

Net assets-without donor restrictions

Net assets - with donor restrictions

Total net assets

Total liabilities and net assets

Support-Contributions (with donor restrictions)