On January $1,2025,$ a new Board of Directors was elected for$$Cullumber$$Hospital$.$ The new board switched to a different accountant. After reviewing the hospital$$s books, the accountant decided that the accounts should be adjusted. Effective January $1,2025,$ the board decided that:

$1$ Separate funds should be established for the General Fund, the$$Cullumber$$Endowment Fund, and the Plant Replacement and Expansion Fund $($the old balances will be reversed to eliminate them$).$

$2$ The accounts should be maintained in accordance with fund accounting principles. The balances in the general ledger at January $1,2025,$ are presented here:

Cash $48,000$

Investment in U$.$S$.$ treasury bills $113,000$

Investment in common stock $421,000$

Interest receivable $4,000$

Accounts receivable $40,000$

Inventory $27,000$

Land $428,000$

Building $255,000$

Equipment $259,000$

Allowance for depreciation $408,000$

Accounts payable $72,000$

Bank loan $149,000$

Endowment fund balance $131,000$

Other fund balances $835,000$

$$Total $1,595,0001,595,000$

The following additional information is available:

$1$ Under the terms of the will of J$.$ Ethington, founder of the hospital, $$The principal of the bequest is to be fully invested in trust forevermore in mortgages secured by productive real estate in Central City and$/$or in U$.$S$.$ Government securities $...$ and the income therefrom is to be used to defray current expenses.$$

$2$ The Endowment Fund consists of the following:

Cash received in $1912$ by bequest from Ethington $89,000$

Net gains realized from $1956$ through $1989$ from the sale of real estate acquired in mortgage foreclosures $24,000$

Income received from $1990$ through $2024$ from $90$day U$.$S$.$ treasury bill investments $18,000$

Balance per general ledger on January $1,2025131,000$

$3$ The land account balance is composed of

A $1912$ appraisal of land at $$10,000$and building at $$6,000,$ received by donation at that time. The building was demolished in $1934.15,000$

Appraisal increase based on insured value in land title policies issued in $1954401,000$

Landscaping costs for trees planted $12,000$

Balance per general ledger on January $1,2025428,000$

$4$ The building balance is composed of

Cost of present hospital building completed in January $1985,$ when the hospital commenced operations $319,000$

Adjustment to record appraised value of building in $1994(105,000)$

Cost of elevator installed in hospital building in January $201041,000$

Balance per general ledger on January $1,2025255,000$

The estimated useful lives of the hospital building and the elevator when new were $50$ years $(9$ years remaining$)$ and $20$ years $(5$ years remaining$),$ respectively.

$5$ The hospital$$s equipment was inventoried on January $1,2025.$ The costs shown in the inventory agreed with the equipment account balance in the general ledger. The allowance for depreciation account at January $1,2025,$ included $$144,000$applicable to equipment, and that amount was determined to be accurate. All depreciation is computed on a straight$-$line basis.

$6$ A bank loan was obtained to finance the cost of new operating room equipment purchased in $2021.$ Interest was paid to December $31,2024.$

$7$ Common stock with a market value of $$421,000$was donated to$$Cullumber$$Hospital with the stipulation that the proceeds from the sale of the stock must be used for facilities expansion. The hospital plans to undertake expansion of its facilities next year and to sell these securities at that time.

Using the workpaper form below, prepare the entries necessary to establish the correct balances as of January $1,2025.$