(a)
Introduction:
The journal entries for the transactions for the general fund
(a)
Answer to Problem 19.13P
Journal Entries
S.no | Date | Particulars | Debit (in $) | Credit (in$) |
1 | 6,160,000 | |||
Patient revenue services | 6,160,000 | |||
2 | Contractual adjustments | 330,000 | ||
Accounts receivable | 330,000 | |||
3 | Nursing services | 1,800,000 | ||
Other professional services | 1,200,000 | |||
Fiscal services | 250,000 | |||
General services | 1,550,000 | |||
120,000 | ||||
Administration | 280,000 | |||
400,000 | ||||
Cash | 4,580,000 | |||
Allowance for uncollectibles | 120,000 | |||
Accumulated depreciation | 400,000 | |||
Accounts payable | 170,000 | |||
Accrued expense | 35,000 | |||
Inventories | 195,000 | |||
Prepaid expenses | 30,000 | |||
Donated services (non-operating gain) | 70,000 | |||
4 | Cash | 75,000 | ||
Due from specific fund | 25,000 | |||
Net assets released from program use restriction | 100,000 | |||
5 | Inventories | 176,000 | ||
Prepaid expenses | 24,000 | |||
Cash | 200,000 | |||
6 | Cash | 85,000 | ||
Income from endowment funds | 85,000 | |||
7 | Cash | 17,000 | ||
Accumulated depreciation | 20,000 | |||
Property, plant and equipment | 30,000 | |||
Gain in sale of equipment | 7,000 | |||
8 | Cash | 5,800,000 | ||
Allowance for uncollectibles | 132,000 | |||
Accounts receivable | 5,932,000 | |||
9 | Investments | 60,000 | ||
Cash | 60,000 | |||
10 | Cash | 72,000 | ||
Board designated investments | 72,000 | |||
11 | Accounts payable | 150,000 | ||
Accrued expenses | 55,000 | |||
Cash | 205,000 | |||
12 | Cash | 20,000 | ||
Deferred revenue reimbursement | 20,000 | |||
13 | Cash | 140,000 | ||
Net assets released from fixed asset acquisition restriction | 140,000 | |||
14 | Cash | 63,000 | ||
Other operating revenue | 63,000 |
Explanation of Solution
- Recording the amount realized from patient services
- Recording the contractual adjustments of patients bill
- Recording the operating expenses
- Recording the gift received from specific purpose fund and its increment
- Recording the payment of inventories and prepaid expenses
- Recording income received from endowment funds
- Recording the sale of X-ray machine and depreciation on it
- Recording receivables and writing off a part of it
- Recording the purchase of investment
- Recording income from board designated investments
- Recording the payment of accounts payable and accrued expenses
- Recording the increase in deferred revenue- reimbursement
- Recording the receipt of revenue from plant replacement and expansion fund
- Recording the sale
(b)
Introduction: The balance sheet of a company discloses the financial position of a company at the end of the year. With the help of a balance sheet one can know the financial capacity of a company at any given point of time.
The comparative balance sheet for the general funds
(b)
Answer to Problem 19.13P
Financial statement for the year ended December 31, 20X2 and 20X1
Particulars | 20X2 | 20X1 |
Assets: | ||
Cash | 1,352,000 | 125,000 |
Accounts receivable | 29,800 | 400,000 |
Less: allowance for uncollectibles | (38,000) | (50,000) |
Due from specific funds | 65,000 | 40,000 |
Inventories | 76,000 | 95,000 |
Prepaid expenses | 14,000 | 20,000 |
Investments | 960,000 | 900,000 |
Property, plant and equipment | 6,07,000 | 6,100,000 |
Less: accumulated depreciation | (1,880,000) | (1,500,000) |
Total | 6,917,000 | 6,130,000 |
liabilities and fund balance | ||
Accounts payable | 170,000 | 150,000 |
Accrued expenses | 35,000 | 55,000 |
Deferred revenues | 95,000 | 75,000 |
Bonds payable | 3,000,000 | 3,000,000 |
Unrestricted net assets | 3,617,000 | 2,850,000 |
Total liabilities | 6,917,000 | 6,130,000 |
Explanation of Solution
The comparative balance sheet of general funds reveal that the value of assets and liabilities increased from $6,130,000 in 20X1 to $6,917,000. An increment of $787,000 was made. this shows that the performance of general fund improved from the previous year but simultaneously the liabilities also increased.
(c)
Introduction: The statement of activities is the financial statement of a non- profit organization or otherwise. The statement of activities has multiple columns for reporting the amounts for the following net assets:
- Without donor restriction funds
- With donor restriction funds
- The aggregate amount
The statement of activities for the year ended 20X2
(c)
Answer to Problem 19.13P
Statement of Activities for the year ended, 20X2
Particulars | Amount (in $) | Amount (in $) |
Unrestricted revenues, gains and support: | ||
Net patient service revenues | 5,830,000 | |
Gain on sale of equipment | 7,000 | |
Cafeteria and gift shop sales | 63,000 | |
Investment income | 157,000 | |
Donated services | 70,000 | |
10,000 | ||
Net assets released fromprogram use restriction | 100,000 | 397,000 |
Total support and revenue (A) | 6,227,000 | |
Operating Expenses: | ||
Nursing services | 1,80,000 | |
Professional services | 1,200,000 | |
Fiscal services | 250,000 | |
General services | 1,550,000 | |
Bad debts | 120,000 | |
Administration | 280,000 | |
Depreciation | 400,000 | |
Total expenses (B) | (5,600,000) | |
Excess of revenue over expenses | 627,000 | |
Other items: | ||
Net assets released from fixed asset acquisition restriction | 140,000 | |
Increase in unrestricted net assets | $767,000 |
Explanation of Solution
The statement of activities is the financial statement for a no- profit organization. In the above presented statement of activities, general fund’s various revenues and expenses are shown under their respective heads. The amount of unrestricted fund balance is $767,000
(d)
Introduction:Cash flow statement records the
activities of the company in three categories: operating, investing and financing, and discloses the sources and applications of cash for the particular period.
The cash flow for the year ended 20X2
(d)
Answer to Problem 19.13P
Cash Flow for the year ended, 20X2
Particulars | Amount (in $) |
Cash flow from operating activities | |
Change in net assets | 767,000 |
Adjustment to reconcile changes in net assets to net cash provided by operating activities: | |
Depreciation | 400,000 |
Gain on sale of property, plant and equipment | (7,000) |
Decrease in net patient accounts receivable | 90,000 |
Increase in due from specific fund | (25,000) |
Decrease in inventories | 19,000 |
Decrease in prepaid expenses | 6,000 |
increase in deferred revenue- reimbursements | 20,000 |
net assets released from fixed asset restriction | (140,000) |
Net cash provided by operating activities | 1,130,000 |
Investing activities | |
Sale of property, plant and equipment | 17,000 |
Transfer in from restricted plant fund | 140,000 |
Purchase of investments | (60,000) |
Net cash provided by investing activities | 97,000 |
Financing activities | 0 |
net increase in cash | 1,227,000 |
Cash at the beginning of the year | 125,000 |
Cash at the end of the year | 1,352,000 |
Explanation of Solution
The cash flow discloses the following incomes:
Operating income: $1,130,000
Investing income: $97,000
Financing income: 0
Cash at the beginning of the year is reported as $1,352,000
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Advanced Financial Accounting
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