Answer:
Midwest Heart Association
1. Journal Entries:
1. Debit Pledges Receivable $700,000
   Credit Pledges Revenue $700,000
To record unrestricted pledges received.
1. Debit Uncollectible Expense $56,000
   Credit Allowance for Uncollectibles $56,000
To record 8% of uncollectible pledges.
2. Debit Temporarily restricted net assets $150,000
    Credit Pledges Receivable $150,000
To record receipt of restricted use grants.
3. Debit Unrestricted net assets $520,000
    Credit Pledges Receivable $520,000
To record current pledges collected
3. Debit Allowance for Uncollectible $26,000
    Credit Uncollectible Expense $26,000
To record the write-off of $30,000 remaining uncollected pledges.
4. Debit Office Equipment $15,000
    Credit Unrestricted net assets $15,000
To record the purchase of office equipment
5. Debit Building Mortgage $3,000
    Credit Unrestricted net assets $3,000
To record the payment of mortgage on buildings.
6. Debit Unrestricted net assets $27,200
    Debit Temporarily restricted net assets $5,400
    Credit Interest and dividends Revenue $32,600
To record the receipt of interest and dividends.
6. Debit Permanently restricted net assets $1,000
    Debit Unrestricted net assets $5,000
    Credit Sale of Endowment Investment $6,000
To record the sale and gain of endowment investments.
7. Debit Depreciation Expense:
   Community services $ 12,000
   Public health education $7,000
   Research $10,000
   Fundraising $15,000
   General and administrative $9,000
Credit Accumulated Depreciation $53,000
To record depreciation expense for the year.
8. Debit Other expenses:
  Community services $ 250,600 
  Public health education $100,000
  Research $81,000
  Fundraising $39,000
  General and administrative $61,000
Credit Unrestricted net assets $531,600
To record other expenses.
Debit Clerical services expense $2,400
Credit Donated clerical services $2,400
To record the receipt of donated clerical services.
b. Statement of Activities for the year ended December 31, 20X2:
Revenue:
Pledges                                  $700,000
Interest and dividends              32,600
Sale of Endowments                   6,000   $738,600
Depreciation expense:
   Community services           $ 12,000
   Public health education        $7,000
   Research                              $10,000
   Fundraising                          $15,000
   General & administrative      $9,000       53,000
Other expenses:
  Community services        $ 250,600 
  Public health education     $100,000
  Research                               $81,000
  Fundraising                          $39,000
  General and administrative $61,000      531,600
Clerical services expense                          $2,400
Change in net assets                              $151,600
Explanation:
a) Data and Calculations
1. Unrestricted net assets
Beginning balance           $ 281,000
Pledges receivable            520,000        
Office equipment                (15,000)
Building mortgage               (3,000)
Interest and Dividends       27,200
Sale of Endowment              5,000
Other expenses              (531,600)
Ending balance             $278,600
2. Temporarily restricted net assets
Beginning balance            $ 87,000
Restricted use grants      $150,000
Interest and Dividends          5,400
Ending balance               $242,400
3. Permanently restricted (endowment) net assets
Beginning balance          $ 219,000
Gain from Endowment           1,000
Ending balance               $220,000
b) Midwest Heart Association's Statement of Activities is the financial statement that shows the revenues and expenses of the association, including the change in net assets during a period.  It is like the income statement of a profit-making entity that shows revenue and expenses.  While the excess in revenue over expenses is called net income for a profit-making entity, it is called change in net assets for a non-profit-making organization like Midwest Heart Association.