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In 2017, the Northwest Ballet Association (NBA), a not for profit performing arts organization, undertook a major capital campaign to fund a new theater, expected to cost $10 mil. It was quickly able to raise $6 mil, all of wich donor resticted. It borrowed the balance, issuing a five -year, 8 percent term note for $4milion.

During the year the NBA broke ground on the project and incurred construction costs of $3.4 million. It earned $0.52 million in intereset on temporary investments. It incurred and paid $0.32 millionin interest on the note. In addition, as requiered by the note, it placed $0.7 million in a reseve fund( a specially dedicated bank account) for the repayment of the debt.

1 To show how these transactions will be reflected on the NBA's financial statements, prepare a December 31, 2017, statement of financial position and statemnet of activities. Asume that these are the only transactions in which the organization engaged and that all of the cash , except that in the reserve fund, has been invested in short term marketable securities. Be sure to properly classify all resources as to whether are temporarily restricted or unrestricted.

2 Comment brifley on whether the contributions from donors and the proceeds from the bonds should be reported as restricted or unrestricted.

3 Comment brifley on whether th 0.7 million in the reseve fund should be repoted as resticted or unrestricted.

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