Question 7 of 10 -/5 On January 1,2025, a new Board of Directors was elected for Sunland 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 Sunland Endowment Fund, and the Plant Replacement and Expansion Fund (the old balances will be reversed to eliminate them). 2 The acceunts should be maintained in accordance with fund accounting principles. The balances in the general ledger at January 1, 2025, are presented here: Cash $52,000 Investment in U.S. treasury bills 101,000 Investment in common stock 419,000 Interest receivable 4,000 Accounts receivable 38,000 Inventory 25,000 Land 431,000 Building 224,000 Equipment 267,000 Allowance for depreciation $404,000 Accounts payable 63,000 Bank loan 150,000 Endowment fund balance 117,000 Other fund balances 827,000 Total $1561000 $1.561000 The following additional information is available: 1. Under the tarms of the will of J. Ethingtan, 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 cu expenses\" } 2. The Endowment Fund consists of the following: Cash received in 1912 by bequest from Ethington 576,000 Net gains realized from 1956 through 1989 from the sale of real estate acquired in mortgage foreclosures 25,000 Income received from 1990 through 2024 from 90-day US. treasury bill investments 16,000 Balance per general ledger on January 1, 2025 $117,000 3. Theland account balance is composed of A 1912 appraisal of land at $9,000 and building at $4,000, received by donation at that time. The building was demolished in 1934 $13,000 Appraisal increase based on insured value in land title policies issued in 1954 407,000 Landscaping costs for trees planted 11,000 Balance per general ledger on January 1, 2025 $431,000 4. Thebuilding balance is composed of Cost of present hospital building completed in January 1985, when the hospital commenced operations $280,000 Adjustment to record appraised value of building in 1994 (97,000} Cost of elevator installed in hospital building in January 2010 41,000 Balance per general ledger on January 1, 2025 $224,000 The estimated useful lives of the hospital building and the elevator when new were 50 vears (9 years remaining) and 20 years (5 years remaining), respectively. - 5. Thehospital'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 $162,000 applicable to equipment, and that amount was determined to be accurate. All depreciation is computed on a straight-line basis. The estimated ussful lives of the hospital building and the elevator when new were 50 years (3 years remaining) and 20 years (S 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 $162,000 applicable to equipment. and that amount was determined to be accurate. All depreciation is computed on a straight-line basis. 6. Abankloanwas obtained ko 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 3419,000 was donated to Sunland 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. Trial Balance Adjustments General Fund Endowment Fund Account Description Debit Credit Debit Credit Debit Credit Debit Credit @ w w 0 0 PPO