For a number of years, a private not-for-profit entity has been preparing financial statements that do not necessarily follow generally accepted accounting principles. At the end of the most recent year (Year 2), those financial statements show total assets of $900,000, total liabilities of $100,000, total unrestricted net assets of $400,000, total temporarily restricted net assets of $300,000, and total permanently restricted net assets of $100,000. In addition, total expenses for the year were $500,000 (shown in unrestricted net assets). Assume that during Year 1, the entity receives a cash gift of $80,000. The donor specified that this money be invested in U. S. government bonds with the income to be used to help pay the salaries of the entity’s employees. The gift was recorded as an increase in net assets with donor restrictions. The investments earned $5,000 during Year 1 and $7,000 during Year 2. The entity reported these amounts on the statement of activities as increases in net assets without donor restrictions. In both cases, the money was immediately expended for salaries, amounts that were recorded as expenses within net assets without donor restrictions. No other journal entries were made in connection with this income and the income earned.

Required:
a. What was the correct amount of unrestricted net assets at the end of Year 2?
b. What was the correct amount of expenses in unrestricted net assets for Year 2?
c. What was the correct amount of temporarily restricted net assets at the end of Year 2?