The Watson Foundation, a private not-for-profit organization, starts the year with cash of $100,000, pledges receivable (net) of $200,000, investments of $300,000, and land, buildings, and equipment of $200,000. In addition, its unrestricted net assets were $400,000, temporarily restricted net assets were $100,000, and permanently restricted net assets were $300,000. Of the temporarily restricted net assets, 50 percent must be used for a new building; the remainder is restricted for salaries. No implied time restriction was designated for the building when it was purchased. For the permanently restricted net assets, all income is unrestricted.During the current year, the organization has the following transactions:• Computed interest of $20,000 on the pledge receivable.• Received cash of $100,000 on the pledges and wrote off another $4,000 as uncollectible.• Received unrestricted cash gifts of $180,000.• Paid salaries of $90,000 with $15,000 of that amount coming from restricted funds.• Received a cash gift of $12,000 that the organization must convey to another not-for-profit organization. However, Watson has the right to give the money to a different organization if it so chooses.• Bought a building for $500,000 by signing a long-term note for $450,000 and using restricted funds for the remainder.• Collected membership dues of $30,000. Individuals receive substantial benefits from the memberships.• Received income of $30,000 generated by the permanently restricted net assets.• Paid rent of $12,000, advertising of $15,000, and utilities of $16,000.• Received an unrestricted pledge of $200,000; it will be collected in five years. The organization expects to collect the entire amount. Present value is $149,000. It then recognized interest of $6,000 for the year.• Computed depreciation as $40,000.• Paid $15,000 in interest on the note signed to acquire the building.a. Prepare a statement of activities for this organization for this year.b. Prepare a statement of financial position for this organization for this year.View Solution:
The Watson Foundation a private not for profit organization starts the year

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