NFP Accounting-Church Capital Campaign, Revenue Recognition

I am not familiar with not for profit accounting rules. Our church treasurer has asked me how & when they should recognize revenue on a capital campaign to do a large improvement project on their building that they lease.

What is the journal entry when the funds are received?
DR Cash (Temp Restricted) XXX
CR Income (Temp Restricted) XXX

What do they do when the cash is used for the improvements?
DR Improvement (Unrestricted) YY
CR Cash (Temp Restricted) YY

But this causes the net asset balances for both Unrestricted and Temp Restricted to become unbalanced. Do we recognize some sort of expense item on the Temp Restricted P&L and some sort of income item in the Unrestricted P&L?

Each post is two JEs
Upon receipt: 1) DR-cash; CR-income 2) DR- unrestricted net assets; CR- temporarily restricted net assets

Upon spending the cash: 1) DR- improvement; CR-cash 2) DR- temporarily restricted net assets; CR- unrestricted net assets

Thank you, CaptCook.

I need some additional clarification:

On part 1 on both of your answers, can you please clarify if these are Unrestricted or Temp Restricted accounts that are being recorded?

I am also confused by the 2nd part of both of your answers. You debit and credit the net asset balance account. Are those "Balance Sheet" accounts or "P&L" accounts?

I don't have a separate temporarily restricted income account. I find it doesn't always get reconciled to the proper TR asset account. I prefer to account for the movement directly in the net asset accounts. Then you can back into the proper income to show on the P&L.

#2 of both JEs are balance sheet accounts only.