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Task 1 Healthcare Organizations A loca l private not - for - profit health care entity incurred the following transactions during the current year. Record

Task 1

Healthcare Organizations

A loca

l private not

-

for

-

profit health

care entity incurred the following transactions during

the current year. Record each of these transactions in appropriate journal

entry form.

Prepare a schedule calculating the change in unrestricted, permanently restricted, and

temporarily restricted net assets.

a. The organizations governing board announced that $160,000 in previously

unrestricted cash will be used in the future

to acquire equipment. The funds are

invested until the purchase eventually occurs.

b. Received a donation of $80,000 with the stipulation that all income derived

from this money be used to supplement nursing salaries.

c. Expended $25,000 for medicines. Org

anization received the money the

previous year as a restricted gift for this purpose.

d. Charged patients $600,000, 80 percent of which is expected to be covered by

third party payors.

e. Calculated depreciation expense of $38,000.

f. Received interest inc

ome of $15,000 on the investments the board acquired in

transaction (a).

g. Estimated that $20,000 of current accounts receivable from patients will not be

collected and that third

-

party payors will reduce the amounts owed by $30,000

because of contractual

adjustments.

h. Consumed the medicines acquired in (c).

i. Sold the investments acquired in (a) for $172,000. Spent all restricted cash

(including [ f ] above) and $25,000 that previously had been given to the

organization (with the stipulation that the m

oney be used to acquire plant assets)

for new equipment. No time restriction was assumed on this equipment.

j. Received pledges for $126,000 in unrestricted donations. Of the pledges, 10

percent are collected immediately with 90 percent to be received and

used in

future years. Officials estimate that $9,000 of this money will never be collected.

Present value of the receivable is $98,000.

Task 2 Nonprofit Universities You are preparing a statement of activities for the University of Richland, a private no t - for - profit organization. The following questions should be viewed as independent of each other. Part 1 During the current year, a donor gives $400,000 in cash to the school and stipulates that it must hold this money forever. However, any investment inco me earned on this money must be used for faculty salaries. During the current year, the investment earned $31,000 and, of that amount, the school has expended $22,000 appropriately to date. As a result of these events, what was the overall change in each o f the following for the current year? a. Unrestricted net assets. b. Temporarily restricted net assets. c. Permanently restricted net assets.

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