Typical transactions engaged in by not-for-profit organizations.

Typical transactions engaged in by not-for-profit organizations.

Typical transactions engaged in by not-for-profit organizations.

This problem summarizes typical transactions engaged in by not-for-profit organizations.

The American Association for Freedom, a political think tank, was recently established. During its first year of operations is engaged in the following transactions and was affected by the following events (in summary form):

It received a $10,000,000 endowment contribution from a donor, all in stocks and bonds.

It received $3,000,000 in additional contributions, all restricted for its educational programs and $2,300,000 in contributions  without donor restrictions.

It acquired $800,000 in furniture, fixtures, and equipment, all of which have an expected useful life of 10 years.

It recognized depreciation on the furniture, fixtures, and equipment, purchased earlier in the year.

It spent $2,400,000 on educational programs. It earned $300,000 in interest and dividends on its endowment investments.

By year-end, the value of its investments had appreciated by $600,000.It incurred $1,300,000 in administrative expenses.

Near year-end it received a pledge of $4,500,000, to be fulfilled in three annual installments of  $1,500,000 beginning in one year.

The Association determined that a discount rate of 6 percent was appropriate. A. Prepare journal entries to record these events and transactions.

Be sure to indicate the fund-type in which the entry would be made. Prepare a year-end statement of financial position and statement of activities.

You must proofread your paper. But do not strictly rely on your computer’s spell-checker and grammar-checker; failure to do so indicates a lack of effort on your part and you can expect your grade to suffer accordingly. Papers with numerous misspelled words and grammatical mistakes will be penalized. Read over your paper – in silence and then aloud – before handing it in and make corrections as necessary. Often it is advantageous to have a friend proofread your paper for obvious errors. Handwritten corrections are preferable to uncorrected mistakes.

Use a standard 10 to 12 point (10 to 12 characters per inch) typeface. Smaller or compressed type and papers with small margins or single-spacing are hard to read. It is better to let your essay run over the recommended number of pages than to try to compress it into fewer pages.

Likewise, large type, large margins, large indentations, triple-spacing, increased leading (space between lines), increased kerning (space between letters), and any other such attempts at “padding” to increase the length of a paper are unacceptable, wasteful of trees, and will not fool your professor.

The paper must be neatly formatted, double-spaced with a one-inch margin on the top, bottom, and sides of each page. When submitting hard copy, be sure to use white paper and print out using dark ink. If it is hard to read your essay, it will also be hard to follow your argument.