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A local private not - for - profit health care entity ( Rochester Medical ) incurred the following transactions during the current year. The entity
A local private notforprofit 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
a The board of governors for Rochester Medical RM announces that $ in previously unrestricted cash will be used in the
near future to acquire equipment. These funds are invested until the purchase eventually occurs.
b RM receives a donation of $ in cash with the stipulation that the money be invested in US government bonds. All
subsequent income derived from this investment must be paid to supplement nursing salaries.
c RM spends $ 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.
d RM charges patients $ million. These amounts are the responsibility of government programs and insurance companies. These
thirdparty payors will receive explicit price concessions because of long standing contracts. Officials believe RM has an
percent chance of receiving $ million and a percent chance of receiving $ million. RM has a policy of reporting the most
likely outcome.
e RM charges patients $ million. These patients are not insured. RM sets implicit price concessions because of the high cost of
health care. Officials believe RM has a percent chance of collecting $ and a percent chance of receiving
$ As stated before, RM has a policy of reporting the most likely outcome.
f RM charges patients $ These patients have little or no income. The hospital administration chooses to view this work as
charity care and make no attempt at collection.
g Depreciation expense for the year is $ Of that amount, percent relates to health care, percent to administrative,
and percent to fundraising.
h RM receives interest income of $ on the investments acquired in a
i Based on past history, officials estimate that $ of the reported receivable amount from thirdparty 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
$ of the reported receivable amount will not be collected.
The medicines in c are consumed through daily patient care.
j RM sells the investments in a for $ in cash. RM used that money plus the previously recorded interest income along
with $ in cash given last year to RM with the donor stipulation that the money be used for equipment to buy new
equipment.
k RM receives pledges near the end of the year totaling $ Of that amount, $ is judged to be conditional. The
remaining $ has a donorstipulated purpose restriction. The present value of the $ is calculated as $
Required:
a Record each of these transactions in appropriate journal entry form. If no entry is required for a transactionevent select No
journal entry required" in the first account field. Enter your answers in dollars not in millions of dollars.
b Prepare a schedule calculating the change in net assets without donor restrictions and net assets with donor restrictions. Negative
amounts should be indicated by a minus sign. Enter your answers in dollars not in millions of dollars.
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