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Problem 2 (70 points) 2. St. David's Hospital, a private not-for-profit, began the year 2017 with the following trial balance: Credits Debits 705,000 620,000 145,000 Cash Patient Accounts Receivable Allowance for Contractual Adjustments Property, Plant, and Equipment - Net of Depreciation Accounts Payable Unrestricted Net Assets Temporarily Restricted Net Assets 800,000 540,000 1,200,000 240,000 2,125,000 2,125,000 Transactions for 2017 are as follows: (a) Collected $340,000 of the Patient Accounts Receivable that was outstanding at 12-31- 2016. Actual contractual adjustments on these receivables totaled $152,000. (b) The Hospital billed patients $2,350,000 for services rendered. Of this amount, 7% is expected to be uncollectible. Contractual adjustments with insurance companies are expected to total $792,000. (Hint: use an allowance account to reduce accounts receivable for estimated contractual adjustments). The Hospital collected $1,235,000 of the amount billed to patients (c) In 2016 the Hospital had received a contribution of $240,000 to purchase new ultrasound equipment. The equipment was purchased for $300,000 in 2017. (d) Charity care in the amount of $60,000 (at standard charges) was performed for indigent patients. (e) The Hospital received $700,000 in securities to establish a permanent endowment. Income from the endowment is unrestricted. (f) Other revenues collected in cash were: gift shop $11,000 and cafeteria $34,000. (g) The Hospital received in cash unrestricted interest income on endowments of $5,000. Unrealized gains on endowment investments totaled $7,000. (h) Expenses amounting to $1,160,000 for Professional Care of Patients, $340,000 for General Services, and $219,000 for Administration were paid in cash. (i) Depreciation on fixed assets, including the ultrasound equipment, totaled $125,000 for the year. ($90,000 for Professional Care of Patients, $18,000 for General Services, and $16,000 for Administration.) (1) Closing entries were prepared. Required: A. Record the transactions described above. B. Prepare in good form, a Statement of Operations for the year ended December 31, 2017 Prepare in good form, a Statement of Changes in Net Assets for the year ended December 31, 2017 C. Problem 2 (70 points) 2. St. David's Hospital, a private not-for-profit, began the year 2017 with the following trial balance: Credits Debits 705,000 620,000 145,000 Cash Patient Accounts Receivable Allowance for Contractual Adjustments Property, Plant, and Equipment - Net of Depreciation Accounts Payable Unrestricted Net Assets Temporarily Restricted Net Assets 800,000 540,000 1,200,000 240,000 2,125,000 2,125,000 Transactions for 2017 are as follows: (a) Collected $340,000 of the Patient Accounts Receivable that was outstanding at 12-31- 2016. Actual contractual adjustments on these receivables totaled $152,000. (b) The Hospital billed patients $2,350,000 for services rendered. Of this amount, 7% is expected to be uncollectible. Contractual adjustments with insurance companies are expected to total $792,000. (Hint: use an allowance account to reduce accounts receivable for estimated contractual adjustments). The Hospital collected $1,235,000 of the amount billed to patients (c) In 2016 the Hospital had received a contribution of $240,000 to purchase new ultrasound equipment. The equipment was purchased for $300,000 in 2017. (d) Charity care in the amount of $60,000 (at standard charges) was performed for indigent patients. (e) The Hospital received $700,000 in securities to establish a permanent endowment. Income from the endowment is unrestricted. (f) Other revenues collected in cash were: gift shop $11,000 and cafeteria $34,000. (g) The Hospital received in cash unrestricted interest income on endowments of $5,000. Unrealized gains on endowment investments totaled $7,000. (h) Expenses amounting to $1,160,000 for Professional Care of Patients, $340,000 for General Services, and $219,000 for Administration were paid in cash. (i) Depreciation on fixed assets, including the ultrasound equipment, totaled $125,000 for the year. ($90,000 for Professional Care of Patients, $18,000 for General Services, and $16,000 for Administration.) (1) Closing entries were prepared. Required: A. Record the transactions described above. B. Prepare in good form, a Statement of Operations for the year ended December 31, 2017 Prepare in good form, a Statement of Changes in Net Assets for the year ended December 31, 2017 C
