Question
In: Accounting
During 2020, the following transactions were recorded by the Port Hudson Community Hospital, a private sector...
During 2020, the following transactions were recorded by the
Port Hudson Community Hospital, a private sector not-for-profit
institution:
- Gross charges for patient services, all charged to Patient Accounts Receivable, amounted to $1,950,000. Estimated contractual adjustments with third-party payors amounted to $550,000 and the Hospital estimated implicit price concessions would total $25,000.
- Charity services, not included in transaction 1, would amount to $96,000, had billings been made at gross amounts.
- Other revenues, received in cash, were parking lot, $35,000; cafeteria, $57,500; gift shop, $12,500.
- Cash gifts restricted by the donor for programs amounted to $38,750 for the year. During the year, $77,000 was expended for technician salaries supporting the program identified by the donor (debit Operating Expense—Salaries and Benefits).
- Mortgage bond payments amounted to $74,000 for principal and $46,000 for interest. Assume unrestricted resources are used.
- During the year, the hospital received, in cash, unrestricted contributions of $63,000 and unrestricted income of $53,750 from endowment investments. (It is the hospital’s practice to treat unrestricted gifts as nonoperating income.)
- New equipment, costing $182,000, was acquired, using donor-restricted cash that was on hand at the beginning of the year.
- An old piece of lab equipment that originally cost $200,000 and that had an undepreciated cost of $40,000 was sold for $22,000 cash.
- At the end of 2020, pledges (restricted as to purpose) were received in the amount of $195,000. These are intended to be received and expended in 2021.
- Cash contributions were received from donors restricted for plant acquisition, $218,750.
- Bills were received for the following items: Utilities $158,500 and Insurance $92,000. These will be paid in January of 2021.
- Depreciation of plant and equipment amounted to $225,000.
- Cash payments on accounts payable amounted to $208,500. Another $834,500 was expended on wages and benefits.
- Cash collections of patient accounts receivable amounted to $1,210,000. These were in settlement of patient accounts totaling $1,662,000. Contractual adjustments associated with these totaled $430,000 and price concessions totaled $22,000.
- Closing entries were prepared.
Required:
a. Record the transactions in the general journal
of the Port Hudson Community Hospital.
b. Prepare a Statement of Operations for the Port
Hudson Community Hospital for the year ended December 31,
2020.
c. Prepare a Statement of Changes in Net Assets
for the Port Hudson Community Hospital for the year ended December
31, 2020. Assume beginning net assets are $7,225,000
Solutions
Expert Solution
Prepare journal entries as follows:
| Trn. | General Journal | Debit | Credit |
| 1 | Patient Accounts Receivables | $1,950,000 | |
| Revenues-Unrestricted-Patient Service Revenue | $1,950,000 | ||
| Contractual Adjustments-Unrestricted | $550,000 | ||
| Patient Accounts Receivable | $550,000 | ||
| 2 | N/A | ||
| 3 | Cash | $105,000 | |
| Operating Revenues-unrestricted other revenue | $105,000 | ||
| [$35000+$57500+$12500] | |||
| 4 | Cash | $38,750 | |
| Revenues-Temporarily Restricted-contributions | $38,750 | ||
| Operating Expense-Salaries and benefits | $77,000 | ||
| Cash | $77,000 | ||
| Reclassification from Temporarily Restricted Net Assets-satisfaction of program Restrictions | $38,750 | ||
| Reclassification to unrestricted Net Assets -satisfaction of program Restrictions | $38,750 | ||
| 5 | Operating Expense-Interest | $46,000 | |
| Mortgage Bonds payable | $74,000 | ||
| Cash | $120,000 | ||
| 6 | Cash | $116,750 | |
| Non-operating Income-Unrestricted-Gifts | $63,000 | ||
| Non-operating Income-Unrestricted-Income on Investments of Endowment funds | $53,750 | ||
| 7 | Equipment | $182,000 | |
| Cash | $182,000 | ||
| Reclassification from Temporarily restricted Net Asset-class-satisfaction of Acquisition Restrictions | $182,000 | ||
| Reclassification from Unrestricted Net Asset-class-satisfaction of Plan Acquisition Restrictions | $182,000 | ||
| 8 | Cash | $22,000 | |
| Accumulated Depreciation-Equipment [$200,000 - $40,000] | $160,000 | ||
| Loss of sale of Equipment -Unrestricted-Equipment [$40,000 - $220,00] | $18,000 | ||
| Equipment | $200,000 | ||
| 9 | Contribution Receivables | $195,000 | |
| Revenues-Temporarily Restricted-contributions | $195,000 | ||
| 10 | Cash | $218,750 | |
| Revenues-Temporarily Restricted-contributions | $218,750 | ||
| 11 | Operating Expense-Utilities | $158,500 | |
| Operating Expense-Insurance | $92,000 | ||
| Accounts payable | $250,500 | ||
| 12 | Operating Expense-Depreciation | $225,000 | |
| Accumulated Depreciation | $225,000 | ||
| 13 | Accounts payable | $208,500 | |
| Cash | $208,500 | ||
| Operating Expense-Salaries and benefits | $834,500 | ||
| Cash | $834,500 | ||
| 14 | Cash | $1,210,000 | |
| Patient Accounts Receivable | $1,210,000 | ||
| 15 | Unrestricted: | ||
| Operating Revenues-Unrestricted-Patient Service Revenue | $1,950,000 | ||
| Operating Revenues-unrestricted other revenue | $105,000 | ||
| Non-operating Income-Unrestricted-Gifts | $63,000 | ||
| Non-operating Income-Unrestricted-Income on Investments of Endowment funds | $53,750 | ||
| Reclassification to unrestricted Net assets: | |||
| satisfaction of program restriction | $38,750 | ||
| satisfaction of PPE Acquisition Restrictions | $182,000 | ||
| Contractual adjsutments | $550,000 | ||
| Loss on sale of equipment | $18,000 | ||
| Operating Expenses: | |||
| Depreciation | $225,000 | ||
| Salaries and benefits | $834,500 | ||
| Utilities | $158,500 | ||
| Insurance |
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institution:
Gross charges for patient services, all charged to Patient
Accounts Receivable, amounted to $1,970,000. Estimated contractual
adjustments with third-party payors amounted to $560,000 and the
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Charity services, not included in transaction 1, would amount
to $100,000, had billings been made at gross amounts.
Other revenues, received in cash, were parking lot, $37,000;
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Charity services, not included in transaction 1, would amount to
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