A local private not-for-profit health care entity (Rochester Medical) incurred the following transactions during the current year. The entity has one program service (health care) and two supporting services (fundraising and administrative).

The board of governors for Rochester Medical (RM) announces that $160,000 in previously unrestricted cash will be used in the near future to acquire equipment. These funds are invested until the purchase eventually occurs.

RM receives a donation of $80,000 in cash with the stipulation that the money be invested in U.S. government bonds. All subsequent income derived from this investment must be paid to supplement nursing salaries.

RM spends $27,000 in cash to acquire medicines. RM had received this money during the previous year. The donor had specified that it had to be used for medicines.

RM charges patients $2 million. These amounts are the responsibility of government programs and insurance companies. These third-party payors will receive explicit price concessions because of long standing contracts. Officials believe RM has an 80 percent chance of receiving $1.5 million and a 20 percent chance of receiving $1.0 million. RM has a policy of reporting the most likely outcome.

RM charges patients $1 million. These patients are not insured. RM sets implicit price concessions because of the high cost of health care. Officials believe RM has a 70 percent chance of collecting $250,000 and a 30 percent chance of receiving $100,000. As stated before, RM has a policy of reporting the most likely outcome.

RM charges patients $600,000. These patients have little or no income. The hospital administration chooses to view this work as charity care and make no attempt at collection.

Depreciation expense for the year is $110,000. Of that amount, 70 percent relates to health care, 20 percent to administrative, and 10 percent to fundraising.

RM receives interest income of $15,000 on the investments acquired in (a).

Based on past history, officials estimate that $52,000 of the reported receivable amount from third-party payors will never be collected. Of the amount reported by uninsured patients who are expected to pay a portion of their debt, officials estimate that $20,000 of the reported receivable amount will not be collected. The medicines in (c) are consumed through daily patient care.

RM sells the investments in (a) for $174,000 in cash. RM used that money plus the previously recorded interest income (along with $25,000 in cash given last year to RM with the donor stipulation that the money be used for equipment) to buy new equipment.

RM receives pledges near the end of the year totaling $200,000. Of that amount, $38,000 is judged to be conditional. The remaining $162,000 has a donor-stipulated purpose restriction. The present value of the $162,000 is calculated as $131,000.

a. Record each of these transactions in appropriate journal entry form.

b. Prepare a schedule calculating the change in net assets without donor restrictions and net assets with donor restrictions.

PLEASE ONLY ASSIST WITH THE INCORRECT PORTIONS
Transcribed Image Text:1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 a. b-1. b-2. 0-1. c-2. d. e. f. 9. h. i-1. i-2. j-1. j-2. j-3. Investments-internally restricted Cash Cash Contribution revenue-net assets with donor restrictions Investments-permanently restricted Cash Medical supplies Cash Reclassified-net assets with donor restrictions Reclassified-net assets without donor restrictions Accounts receivable-covered patients Patient service revenues Accounts receivable-uninsured patients Patient service revenues No journal entry required Depreciation expense-healthcare Depreciation expense-administrative Depreciation expense-fundraising Accumulated depreciation Cash Interest revenue - net assets without donor restrictions Bad debt expense-healthcare Allowance for doubtful accounts-covered patients Allowance for doubtful accounts-uninsured patients Pharmaceutical expense-healthcare Medical supplies Cash Investments internally restricted Gain on sale of investments-assets without donor restrictions Equipment Cash Reclassified-net assets with donor restrictions Reclassified-net assets without donor restrictions 33 33 >> 33 33 33 33 3 3333 33 3 > 33 333 33 3 > 180,000 80,000 80,000 3 3 27,000 → 27,000 → 1,500,000✔ 250,000 ✓ 77,000 → 22,000 → 11,000✔ 15,000 ✓ 72,000 ✓ 27,000 → 214,000 174,000 → 40,000 x 160,000✔ 80,000 80,000 27,000✔ 27,000 1,500,000 250,000 110,000 15,000 52,000 20,000 27,000 160,000 14,000 214,000 40,000 X
Transcribed Image Text:Contribution revenue Patient service revenues Interest income Gain on sale of investments Reclassified from net assets with donor restrictions to net assets without donor restrictions Contributions, revenues, and reclassifications Expenses Healthcare Depreciation Bad debts Pharmaceutical Administrative Depreciation Fundraising Answer is not complete. Depreciation Total expenses Increase in net assets 19 77,000 72,000✔ 27,000✔✔ Assets Without Donor Restrictions $ 1,750,000✔ 14,000✔ 40,000 X 1,804,000 176,000 22,000✔ 11,000 209,000 $ 1,595,000 Assets With Donor Restrictions $ 211,000✔ 15,000 X 40,000 X 268,000 0 $ 288,000

Question

A local private not-for-profit health care entity (Rochester Medical) incurred the following transactions during the current year. The entity has one program service (health care) and two supporting services (fundraising and administrative).

The board of governors for Rochester Medical (RM) announces that $160,000 in previously unrestricted cash will be used in the near future to acquire equipment. These funds are invested until the purchase eventually occurs.
RM receives a donation of $80,000 in cash with the stipulation that the money be invested in U.S. government bonds. All subsequent income derived from this investment must be paid to supplement nursing salaries.
RM spends $27,000 in cash to acquire medicines. RM had received this money during the previous year. The donor had specified that it had to be used for medicines.
RM charges patients $2 million. These amounts are the responsibility of government programs and insurance companies. These third-party payors will receive explicit price concessions because of long standing contracts. Officials believe RM has an 80 percent chance of receiving $1.5 million and a 20 percent chance of receiving $1.0 million. RM has a policy of reporting the most likely outcome.
RM charges patients $1 million. These patients are not insured. RM sets implicit price concessions because of the high cost of health care. Officials believe RM has a 70 percent chance of collecting $250,000 and a 30 percent chance of receiving $100,000. As stated before, RM has a policy of reporting the most likely outcome.
RM charges patients $600,000. These patients have little or no income. The hospital administration chooses to view this work as charity care and make no attempt at collection.
Depreciation expense for the year is $110,000. Of that amount, 70 percent relates to health care, 20 percent to administrative, and 10 percent to fundraising.
RM receives interest income of $15,000 on the investments acquired in (a).
Based on past history, officials estimate that $52,000 of the reported receivable amount from third-party payors will never be collected. Of the amount reported by uninsured patients who are expected to pay a portion of their debt, officials estimate that $20,000 of the reported receivable amount will not be collected. The medicines in (c) are consumed through daily patient care.
RM sells the investments in (a) for $174,000 in cash. RM used that money plus the previously recorded interest income (along with $25,000 in cash given last year to RM with the donor stipulation that the money be used for equipment) to buy new equipment.
RM receives pledges near the end of the year totaling $200,000. Of that amount, $38,000 is judged to be conditional. The remaining $162,000 has a donor-stipulated purpose restriction. The present value of the $162,000 is calculated as $131,000.

a. Record each of these transactions in appropriate journal entry form.

b. Prepare a schedule calculating the change in net assets without donor restrictions and net assets with donor restrictions.

PLEASE ONLY ASSIST WITH THE INCORRECT PORTIONS

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
a.
b-1.
b-2.
0-1.
c-2.
d.
e.
f.
9.
h.
i-1.
i-2.
j-1.
j-2.
j-3.
Investments-internally restricted
Cash
Cash
Contribution revenue-net assets with donor restrictions
Investments-permanently restricted
Cash
Medical supplies
Cash
Reclassified-net assets with donor restrictions
Reclassified-net assets without donor restrictions
Accounts receivable-covered patients
Patient service revenues
Accounts receivable-uninsured patients
Patient service revenues
No journal entry required
Depreciation expense-healthcare
Depreciation expense-administrative
Depreciation expense-fundraising
Accumulated depreciation
Cash
Interest revenue - net assets without donor restrictions
Bad debt expense-healthcare
Allowance for doubtful accounts-covered patients
Allowance for doubtful accounts-uninsured patients
Pharmaceutical expense-healthcare
Medical supplies
Cash
Investments internally restricted
Gain on sale of investments-assets without donor restrictions
Equipment
Cash
Reclassified-net assets with donor restrictions
Reclassified-net assets without donor restrictions
33
33
>>
33
33
33
33
3
3333
33
3
>
33
333
33
3
>
180,000
80,000
80,000
3
3
27,000 →
27,000 →
1,500,000✔
250,000 ✓
77,000 →
22,000 →
11,000✔
15,000 ✓
72,000 ✓
27,000 →
214,000
174,000 →
40,000 x
160,000✔
80,000
80,000
27,000✔
27,000
1,500,000
250,000
110,000
15,000
52,000
20,000
27,000
160,000
14,000
214,000
40,000 X

Contribution revenue
Patient service revenues
Interest income
Gain on sale of investments
Reclassified from net assets with donor restrictions to
net assets without donor restrictions
Contributions, revenues, and reclassifications
Expenses
Healthcare
Depreciation
Bad debts
Pharmaceutical
Administrative
Depreciation
Fundraising
Answer is not complete.
Depreciation
Total expenses
Increase in net assets
19
77,000
72,000✔
27,000✔✔
Assets
Without
Donor
Restrictions
$ 1,750,000✔
14,000✔
40,000 X
1,804,000
176,000
22,000✔
11,000
209,000
$ 1,595,000
Assets With
Donor
Restrictions
$
211,000✔
15,000 X
40,000 X
268,000
0
$ 288,000

Accepted Answer

Since only asked for.incorrect answers
 
First is to compute amount for last journal entry
Second is…