a.
Prepare
a.
Explanation of Solution
Not for profit organizations: The business entities whose motive of business is not to reap economic benefits and to provide services for the well-being of society.
Prepare journal entry to record the given transaction by assuming Hospital E is a not-for profit organization.
Transaction Number | Account Title | Debit ($) | Credit ($) |
1. | Accounts and notes receivable | 2,979,650 | |
Contractual adjustments | 1,520,000 | ||
Patients service revenue | 3,500,900 | ||
Other operating revenues | 998,750 | ||
(To record accrual of revenues and gains) | |||
2. | Cash | 2,960,600 | |
Assets limited as to use-Cash | 7,350 | ||
Accounts and notes receivable | 2,960,600 | ||
Investment income-without donor restrictions | 7,350 | ||
(To record cash receipts) | |||
3. | Administration expenses | 446,480 | |
General service expenses | 524,360 | ||
Nursing services expenses | 1,031,800 | ||
Other professional services expense | 342,750 | ||
Accounts payable | 891,000 | ||
Accrued payroll | 1,454,390 | ||
(To record accounts payable) | |||
Net assets released from restriction-with donor restrictions | 94,000 | ||
Net assets released from restriction-without donor restrictions | 94,000 | ||
(To record release of restricted net assets) | |||
4. | Nursing services expenses | 140,000 | |
General services expenses | 140,000 | ||
Mortgage payable | 500,000 | ||
Accounts payable | 836,800 | ||
Accrued payroll | 1,279,500 | ||
Cash | 2,896,300 | ||
(To record cash payments) | |||
5. | Assets limited to use-interest receivable | 1,180 | |
Investment income-without donor restrictions | 1,180 | ||
(To record release of restricted net assets) | |||
6. | Administration expense | 49,100 | |
General services expense | 49,100 | ||
Nursing services expense | 110,475 | ||
Other professional service expenses | 36,825 | ||
Accumulated | 117,000 | ||
Accumulated depreciation-equipment | 128,500 | ||
(To record allocation of expense) | |||
7. (a) | No entry is required | ||
7. (b) | Inventory | 2,100 | |
Administration expense | 700 | ||
Nursing services expense | 200 | ||
Other professional services expense | 2,700 | ||
General services expenses | 300 | ||
(To record supplies inventory balances) | |||
7.(c) | Mortgage payable | 500,000 | |
Current portion of mortgage payable | 500,000 | ||
(To record mortgage payable due) | |||
8. | Unrealized loss on investments | 663 | |
Assets limited as to use-investments | 663 | ||
(To record unrealized loss in investments) | |||
Closing entry: | |||
9. | Patient services revenue | 3,500,900 | |
Other operating revenues | 998,750 | ||
Investment income-without donor restriction | 8,530 | ||
Contractual adjustments | 1,520,000 | ||
Administration services expenses | 496,280 | ||
General services expense | 713,160 | ||
Nursing services expense | 1,282,475 | ||
Other professional services expense | 376,875 | ||
Unrealized loss on investment | 663 | ||
Net assets-without donor restrictions, undesignated | 118,727 | ||
(To record the closing entry for revenues) | |||
Net assets-without donor restrictions-undesignated | 7,867 | ||
Net assets-without donor restrictions-designated for plant | 7,867 | ||
(To record closing entry for unrestricted net assets) | |||
Net assets-with donor restrictions | 94,000 | ||
Net assets released from restriction-without donor restriction | 94,000 | ||
Net assets-without donor restrictions | 94,000 | ||
Net assets released from restriction-with donor restrictions | 94,000 | ||
(To record closing entry for temporarily restricted and unrestricted) |
(Table 1)
Note:
- Transaction 7 (a): journal entry is not required to be provided for the provision for uncollectible receivable as they are identified to be adequate.
b.
Prepare a balance sheet for Hospital E as of December 31, 2020.
b.
Explanation of Solution
Prepare a balance sheet for Hospital E as of December 31, 2020.
Hospital E | ||
Balance sheet | ||
For the year ended December 31,2020 | ||
(000s omitted) | ||
Particulars | Amount in $ | Amount in $ |
Assets | ||
Current assets: | ||
Cash | 323,600 | |
Accounts and notes receivable (net of uncollectible accounts of $15,800) | 45,550 | |
Inventory | 73,100 | |
Total current assets | 442,250 | |
Assets limited as to use: | ||
Cash | 24,490 | |
Interest receivable | 1,180 | |
Investments | 228,557 | |
Total assets limited as to use | 254,227 | |
Property , plant and equipment: | ||
Land | 210,100 | |
Building (Net of accumulated depreciation of $1,740,000) | 2,776,000 | |
Equipment (Net of accumulated depreciation of $1,153,000) | 1,730,300 | |
Total property, plant and equipment | 4,716,400 | |
Total assets | 5,412,877 | |
Liabilities and net assets | ||
Current liabilities: | ||
Accounts payable | 73,400 | |
Accrued payable | 219,890 | |
Current portion of bonds payable | 500,000 | |
Total current liabilities | 793,290 | |
Long term debt-mortgage payable | 2,000,000 | |
Total liabilities | 2,793,290 | |
Net assets: | ||
Without donor restrictions, undesignated | 2,287,620 | |
With donor restrictions, designated | 254,227 | |
With donor restrictions | 77,740 | 2,619,587 |
Total liabilities and net assets | 5,412,877 |
(Table 2)
c.
Prepare a statement of operations for Hospital for the year ended December 31, 2020.
c.
Explanation of Solution
Prepare a statement of operations for Hospital for the year ended December 31, 2020.
Hospital E | ||
Statement of Operations | ||
For the year ended December 31, 2020 | ||
(000s omitted) | ||
Particulars | Amount in $ | Amount in $ |
Revenue without donor restrictions: | ||
Net patient service revenue | 1,980,900 | |
Other operating revenues | 998,750 | |
Total revenues | 2,979,650 | |
Expense and losses: | ||
Administration expense | 496,280 | |
General services expense | 713,160 | |
Nursing services expense | 1,282,475 | |
Other professional services expenses | 376,875 | |
Total expense | 2,868,790 | |
Excess of revenue over expense and losses | 110,860 | |
Non-operating gains (losses): | ||
Investment income- without donor restrictions | 8,530 | |
Excess of revenue and gains over expense | 119,390 | |
Net assets released from restrictions: | ||
Satisfaction of purpose restrictions | 94,000 | |
Increase in net assets without donor restrictions | 213,390 |
(Table 3)
Note:
- Net patient service revenue is derived from deducting patient service revenue from the net of contractual adjustment that amounts to $1,520,000.
Prepare a statement of changes in net assets for the year ended September 30, 2020.
Hospital E | ||
Statement of Changes in Net Assets | ||
For the year ended December 31, 2020 | ||
(000s omitted) | ||
Particulars | Amount in $ | Amount in $ |
Net assets without donor restrictions: | ||
Excess of revenue and gains over expense and losses | 119,390 | |
Unrealized loss on investments | (663) | |
Net assets released from restrictions | 94,000 | |
Increase in net assets without donor restrictions | 212,727 | |
Net assets with donor restrictions: | ||
Net assets released from restrictions | (94,000) | |
Increase in net assets | 118,727 | |
Net assets at beginning of the year | 2,500,860 | |
Net assets at the end of the year | 2,619,587 |
(Table 4)
d.
Prepare a statement of cash flow for Hospital for the year ended December 31, 2020.
d.
Explanation of Solution
Prepare a statement of cash flow for Hospital for the year ended December 31, 2020.
Hospital E | |
Statement of cash flow | |
For the year ended December 31,2020 | |
Particulars | Amount in $ |
Cash flow from operating activities: | |
Change in assets | 118,727 |
Adjustments to reconcile changes in net assets to net cash provided by operating activities: | |
Increase in | (19,050) |
Increase in interest receivable | (1,180) |
Increase in inventory | (2,100) |
Increase in accounts payable | 54,200 |
Increase in accrued payables | 174,890 |
Depreciation | 245,500 |
Unrealized loss on investments | 663 |
Net cash provided by operating activities | 571,650 |
Cash flows from financing activities: | |
Payment on bond principal | (500,000) |
Net cash used in financing activities | (500,000) |
Net increase in cash and cash equivalents | 71,650 |
Cash and cash equivalents, beginning of the year | 276,440 |
Cash and cash equivalents, end of the year | 348,090 |
(Table 5)
Want to see more full solutions like this?
Chapter 16 Solutions
ACCOUNTING F/GOV.+..(LL)-W/CODE>CUSTOM<
- The following nominal accounts were extracted from the December 31, 2018, adjusted trial balance of Prospect Private Hospital:(attached)Prepare a statement of activities for the year ended December 31, 2018.arrow_forwardRecover Rehabilitation Hospital has the following balances that are extracted from its December 31, 2019, trial balance: Account Debit Credit Nursing Services Expense. . . . . . . . . . Professional Fees Expense. . . . . . . . . . . . . . . . . . . . . . . General and Administrative Expense . . . . . . . . . . . . Depreciation Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Asset Whose Use Is Limited . . . . . . . . . . . . . . . . . . . . . Repairs and Maintenance Expense . . . . . . . . . . . . . . . . Provision for Uncollectible Accounts . . . . . . . . . . . . . . Contractual Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . Patient Service Revenues. . . .. . . . . . . . . . .. . . . . . . . Seminar Income.. . . .. . . . . . . . . . .. . . . . . . . Child Day Care Income. . . .. . . . . . . . . . .. . . . . . . . Parking Fees. . . .. . . . . . . . . . .. .…arrow_forwardRecover Rehabilitation Hospital has the following balances that are extracted from its December 31, 2019, trial balance: Account Debit Credit Nursing Services Expense. . . . . . . . . . Professional Fees Expense. . . . . . . . . . . . . . . . . . . . . . . General and Administrative Expense . . . . . . . . . . . . Depreciation Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Asset Whose Use Is Limited . . . . . . . . . . . . . . . . . . . . . Repairs and Maintenance Expense . . . . . . . . . . . . . . . . Provision for Uncollectible Accounts . . . . . . . . . . . . . . Contractual Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . Patient Service Revenues. . . .. . . . . . . . . . .. . . . . . . . Seminar Income.. . . .. . . . . . . . . . .. . . . . . . . Child Day Care Income. . . .. . . . . . . . . . .. . . . . . . . Parking Fees. . . .. . . . . . . . . . .. .…arrow_forward
- Accounting for patient service revenue Ruby Ruth Hospital had the following transactions during the year ended December 31:1. The hospital provided services to patients insured by third-party payer A amounting to $9.0 millionat its established billing rates. The hospital’s prospective billing arrangement with this third partystipulates payment to the hospital of 70 percent of its established rates for services performed.All billings were paid during the year.2. The hospital provided services to patients insured by third-party payer B amounting to $5.4 millionat its established billing rates. Its retrospective billing arrangement with this third party stipulatesthat the hospital should receive payment at an interim rate of 90 percent of its established rates,subject to retrospective adjustment based on agreed-upon allowable costs. By year-end, B had paidall the billings. Before issuing its financial statements, the hospital estimated that the probableamount it will need to refund to B…arrow_forwardThe following transactions relate to the General Fund of the City of Buffalo Falls for the year ended December 31, 2020: Contracts were issued for contracted services in the amount of $91,750. Note: Enter debits before credits. Transaction General Journal Debit Credit 6aarrow_forwardCOMPLETE THE FOLLOWING JOURNAL ENTERIES FOR SAFETY HOSPITAL FOR 2021 a. January 31 - Purchase $7,500.00 worth of supplies with cash b. April 31 –Mailed a check to suppliers for $5,000.00 of the $10,000.00 it owed at the end of 2018 c. June 30- Paid wages in the amount of $3,000.00 that had been previously recorded as a liability. d. July 31 – Submitted bills in the amount of $35,000.00 to insurance companies or services rendered. e. September 30 - Purchased $15,000.00 worth of supplies on accountarrow_forward
- Prepare general journal form for the following transactions of Bothwell Regional Hospital, a nongovernmental not-for-profit hospital. (If no entry is required for a transaction or event, select "No Journal Entry Required" in the first account field.) For the month just ended, the hospital received in cash $8,000 from the hospital's gift shop sales and received donated medicines with a fair value of $47,000. These medicines are of the type the hospital normally would purchase. The hospital's finance officer, in compliance with the directive of the governing board, invested $600,000 of operating cash in certificates of deposit to be held for future purchases of equipment. New equipment costing $750,000 was purchased from money given to the hospital by a donor in a prior year to be held until needed for equipment purchases. A federal grant was received in cash in the amount of $400,000 to be used for heart research. During the current year, only $50,000 was spent for this research…arrow_forwardPrepare journal entries to record the following transactions of a nonprofit hospital, with expense transactionscategorized by function:1. The hospital billed its uninsured patients for $300,000. Based on historical experience, it expects tocollect 45 percent of that amount over time.2. Nurses and doctors employed by the hospital were paid their salaries, $120,000.3. The chief administrative officer was paid her salary of $12,000.4. The hospital paid its utility bill, $6,000.5. Depreciation on the equipment was $40,800.6. Several adults donated their time (worth $6,000) selling merchandise in the hospital gift shop.7. The hospital billed Medicare $120,000 for services provided at its established rates. The prospectivebilling arrangement gives Medicare a 40 percent discount from these rates.8. A contribution without donor restrictions of $4,800 was received. If no adjustment is necessary, select 'No debit (or credit) entry needed' in the account fields and enter 0 in the amount fields.arrow_forwardYou are provided with a summarized version of the cash account of Lakeside Hospital, a not-for-profit organization for 2018. Cash Account Debit Credit Cash balance, January 1, 2018 Cash received from: Patients Third-party payors Operation of gift shop Unrestricted gifts Contributions restricted for endowment Donor-restricted contributions for purchase of propertyand equipment Early repayment of long-term debt. Cash paid to: Employees Suppliers. Providers of consultation services Bank for interest . Contractor for purchase of property and equipment Cash balance, December 31, 2018 275,900 2,061,900 6,500,000 517,700 323,500 500,000 183,000 1,320,500 242,300 1,151,000 6,200,000 800,000 147,000 501,200 Prepare a statement of cash flows, using the direct method, for the year ended December 31, 2018.arrow_forward
- Pitman Hospital received interest payments of $6,000 during 2022. Its balance sheets reported accrued interest receivable as follows: 12/31/21 $3,000 12/31/22 1,000 What amount should be reported as interest income in the hospital’s 2022 statement of operations? 4,000 2,000 9,000 7,000arrow_forwardThe following is the pre-closing trial balance for Christina Rehabilitation Hospital as of September 30, 2020. CHRISTINA REHABILITATION HOSPITAL Preclosing Trial Balance September 30, 2020 (000s omitted) Debits Credits Cash and Cash Equivalents $ 50,235 Accounts Receivable 61,880 Allowance for Uncollectible Receivables $ 16,580 Inventory 8,440 Prepaid Expenses 6,640 Assets Limited as to Use—Investments 49,470 Investments 201,000 Pledges Receivable 3,850 Discount on Pledges Receivable 940 Land 7,610 Buildings 325,940 Accumulated Depreciation—Buildings 145,960 Equipment 262,160 Accumulated Depreciation—Equipment 119,540 Accounts Payable 20,760 Accrued Payables 26,820 Interest Payable…arrow_forwardPrepare the journal entries for the following transactions, provided the chart accounts below: DATE:APRIL 2022TransactionsApril 01 -Completion of a denture worth 6,000 April 02 - Received 7,000 in total from appointed patients for the whole dayApril 03 -received 7,000 in total from appointed patients for the whole dayApril 04 -received 2,500 in total from appointed patientsApril 05- paid 36,000 for car loan for business/personal useApril 06- received 1,500 from one patient that dayApril 07 -received 3,000 from appointed patients that dayApril 08- purchased dental supplies, 4,500April 09- received 4,000 from appointed patients April 10-received 3,000 in total from appointed patients April 11-received 1,500 from one patient that dayApril 12-paid 10,000 for dental laboratory feeApril 13-received 20,000 from a prosthodontic caseApril 15-paid 13,000 for a lot for future investment/businessApril 15 -paid 7,500 for dental assistantApril 16-received 2500 in total from appointed patientsApril…arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education