Accounting 403 Advanced Financial Reporting. Problem 18-38 (Static) (LO 18-1, 18-2, 18-4)

A private not for proit entity is working to create a cure for a deadly disease. The charity starts the year with one asset, cash of $700,000. Net assets without donor restrictions are $400,000. Net assets with donor restrictions are $300,000. Of the restricted net assets, $160,000 is to be held to buy equipment, $40,000 is to be used for salaries, and the remaining $100,000 must be held permanently. The permanent held amount is to be invested with 70 percent of any subsequent income used to cover advertising for fundraising purposes. The rest of the income is unrestricted.

Required:

a. Prepare a statement of activities for this not-for-profit-entity for the current year.

b. Prepare a statement of financial position for this not-for-profit-entity for the end of the current year.