You are the recently hired accounting manager for Central Clinic and are in charge of reviewing the general ledger accounts and making adjustments as needed under generally accepted accounting principles.

1.A letter you found in the Contributions file from the Physicians Support Group indicates they provided Central Clinic with diagnostic equipment at no charge for three months during the current year. According to Craigs List, the equipment may be rented for $1,500 per month. You were not aware of the situation prior to finding this letter.

2.Depreciation expense was recorded for the year using the depreciation schedule from the prior year. When current year fixed asset additions are considered, the correct amount of depreciation is $225,000. Upon inquiry of your boss, the CFO, you learn Central Clinic considers depreciation expense and mortgage interest to be occupancy-related expenses.

3.Printing expense includes $5,000 for brochures used in the two-year capital campaign which kicked off this year. All other printing expenses relate to printing patient medical forms and informational flyers about the services the clinic provides.

4.Patient fees include $2,000 a patient paid on December 15 as a down payment on in-office surgical procedures which will be performed in early January.

5 In December, you sent letters to all of the doctors and nurses who volunteered at the Clinic during the year. Based on the letters received to date, you determined the following:

According to the local chapter of the American Medical Association, general physicians in the area charge an average of $500 per hour when providing general patient diagnostic services.

The Clinic pays its full time Registered Nurses $35 per hour.

Ten general physicians each volunteered a total of 24 hours per month every month of the year. They spent all of their time seeing patients.

Two Registered Nurses each volunteered a total of 10 hours each month of the year. All of their time was spent seeing patients and assisting the general physicians.

Two neurologists each volunteered a total of 12 hours per month every month of the year. They spent all of their time seeing patients and performing general physician level patient care. The doctors indicated they normally charge $1,100 per hour when providing neurological consults.

6.At the November Board of Directors meeting, the chair of the Board, Dr. Murphy, told you she intended to make her annual end-of-year $5,000 contribution to the Clinic before the end of the fiscal year. You did not make an entry for this at the time since she indicated she would pay before the end of the year. As of early January, no check has been received.

7.Unrestricted contributions revenue includes $15,000 which, based on a letter dated October 1, 2016 from the donor, is to be used to offset patient care expenses next fiscal year..

8.The fair value of unrestricted investments at year end is $350,000.

9.Historically, expenses not directly relating to a specific function were allocated to all functions based on the buildings square footage usage. The analysis you did earlier in the year indicates the relationship of salaries and benefits is a more appropriate allocation basis.

10.A month after you began your job at Central Clinic, you learned the percentages used to allocate salaries and benefits to functions were last revised 10 years ago. Therefore, you studied time records and talked to employees to determine how employees spent their time. Based on these percentages, you determine the following breakdown for salaries and benefits.

Patient Care $ 610,000

Pharmacy 145,000

Administration 340,000

Executive 310,000

Fund Raising 220,000

11.Occupancy and related costs are charged to functions based on the relative square footage used for each program/function. Building space is utilized as follows:

Assesment and waiting rooms 3,800 square feet

Offices for doctors and nurses 1,800 square feet

Pharmacy 500 square feet

Administration 1,600 square feet

Executive 400 square feet

Fund Raising 500 square feet

Based on your analysis, you prepare properly formatted adjusting and reclassifying entries and post them to the working trial balance, as well as journal entries.

Central Clinic, Inc. Working Trial Balance December 31,2016 Adjusted Balance djusted and Reclassified Balance Unadjusted Balance Debit Reclassifications Debit Credit DebitCredit Debit Credit Debit Credit 75,000 25,000 300,000 Cash Receivable Unrestricted Estimated Uncollectible Pledges 50,000 32,000 310,000 4,800,000 Investments Unrestricted Buildin Furniture and Equi Accumulated 300,000 Accounts Payable Accrued Ex Unearned Revenue 75,000 85,000 75,000 345,000 3,500,00 Unrestricted Net Assets 375,000 250,000 Contributions UUnrestricted Contributions Tem Fees for Services Medicare Fees for Services Medicaid Fees for Services Insurance Fees for Services Patients Pharmacy Sales 575,000 400,000 695,000 825,000 175,000 85,000 42,000 12,000 me Unrestricted Net Assets Relcased from Restrictions Tem Unrestricted 350,000 21,000 150,000 350,000 Cost of Salaries and Fringe Benefits e Interest 200,000 Medical !S and Publishing E Contract Services Medical 18,000 58,000 50,000 ciation Ex Totals 4,000 Messages Central Clinic, Inc. Working Trial Balance December 31,2016 Adjusted Balance djusted and Reclassified Balance Unadjusted Balance Debit Reclassifications Debit Credit DebitCredit Debit Credit Debit Credit 75,000 25,000 300,000 Cash Receivable Unrestricted Estimated Uncollectible Pledges 50,000 32,000 310,000 4,800,000 Investments Unrestricted Buildin Furniture and Equi Accumulated 300,000 Accounts Payable Accrued Ex Unearned Revenue 75,000 85,000 75,000 345,000 3,500,00 Unrestricted Net Assets 375,000 250,000 Contributions UUnrestricted Contributions Tem Fees for Services Medicare Fees for Services Medicaid Fees for Services Insurance Fees for Services Patients Pharmacy Sales 575,000 400,000 695,000 825,000 175,000 85,000 42,000 12,000 me Unrestricted Net Assets Relcased from Restrictions Tem Unrestricted 350,000 21,000 150,000 350,000 Cost of Salaries and Fringe Benefits e Interest 200,000 Medical !S and Publishing E Contract Services Medical 18,000 58,000 50,000 ciation Ex Totals 4,000 Messages