16. Which of the following is used for current expenditures by a college?

Unrestricted Restricted

Current Funds Current Funds

a. No No

b. No Yes

c. Yes Yes

d. Yes No

17. Under Newman Hospitals established rate structure, the hospital would have earned patient service revenue of $7,000,000 for the year ended December 31, 2011. However, Newman did not expect to collect this amount because of charity allowances of $1,000,000 and discounts of $500,000 to third party payers. In May 2011, Newman purchased bandages from Ace Supply Co. at a cost of $5,000. However, Ace notified Newman that the invoice was being cancelled and that the bandages were being donated to Newman.

For the year ended December 31, 2011, how much should Newman record as patient service revenue?

a. $7,000,000

b. $6,500,000

c. $6,000,000

d. $5,500,000

18. Under Newman Hospitals established rate structure, the hospital would have earned patient service revenue of $7,000,000 for the year ended December 31, 2011. However, Newman did not expect to collect this amount because of charity allowances of $1,000,000 and discounts of $500,000 to third party payers. In May 2011, Newman purchased bandages from Ace Supply Co. at a cost of $5,000. However, Ace notified Newman that the invoice was being cancelled and that the bandages were being donated to Newman.

For the year ended December 31, 2011, Newman should record the donation of bandages as:

a. a $5,000 reduction in operating expenses.

b. nonoperating revenue of $5,000.

c. other operating revenue of $5,000.

d. a memorandum entry only.