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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:

  1. 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 Hospital estimated implicit price concessions would total $27,000.
  2. Charity services, not included in transaction 1, would amount to $100,000, had billings been made at gross amounts.
  3. Other revenues, received in cash, were parking lot, $37,000; cafeteria, $60,500; gift shop, $13,500.
  4. Cash gifts restricted by the donor for programs amounted to $40,450 for the year. During the year, $80,600 was expended for technician salaries supporting the program identified by the donor (debit Operating Expense—Salaries and Benefits).
  5. Mortgage bond payments amounted to $77,200 for principal and $48,400 for interest. Assume unrestricted resources are used.
  6. During the year, the hospital received, in cash, unrestricted contributions of $65,800 and unrestricted income of $56,250 from endowment investments. (It is the hospital’s practice to treat unrestricted gifts as nonoperating income.)
  7. New equipment, costing $186,000, was acquired, using donor-restricted cash that was on hand at the beginning of the year.
  8. An old piece of lab equipment that originally cost $220,000 and that had an undepreciated cost of $44,000 was sold for $24,000 cash.
  9. At the end of 2020, pledges (restricted as to purpose) were received in the amount of $205,000. These are intended to be received and expended in 2021.
  10. Cash contributions were received from donors restricted for plant acquisition, $225,250.
  11. Bills were received for the following items: Utilities $161,100 and Insurance $93,600. These will be paid in January of 2021.
  12. Depreciation of plant and equipment amounted to $231,000.
  13. Cash payments on accounts payable amounted to $213,900. Another $839,100 was expended on wages and benefits.
  14. Cash collections of patient accounts receivable amounted to $1,214,000. These were in settlement of patient accounts totaling $1,672,000. Contractual adjustments associated with these totaled $434,000 and price concessions totaled $24,000.
  15. 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 $7,255,000.

Solutions

Expert Solution

Solution:

Date Particulars Debit Credit
1 patient account receivable a/c 1,970,000
to unrestricted operating patient service revenue 1,970,000
2 unrestricted contractual adjustment a/c 560,000
to patients accounts receivables 560,000
3. cash a/c 100,000
to operating unrestricted other revenue 100,000
4 cash a/c 40,450
to contribution revenue 40,450
5 salaries operating expenses a/c 80,600
to cash 80,600
6 mortgage bonds payable a/c 77,200
operating interest expenses 48,400
to cash 125,600
7 cash a/c 122,050
to gifts unrestricted income 65,800
to income on endowments unrestricted 56,250
8 equipment a/c 186,000
to cash 186,000
9 temporarily restricted net asset class-satisfaction 186,000
10 cash a/c 24,000
accumulated depreciation of equipment 176,000
loss on the sale of equipment 20,000
to equipment 220,000
11 contributions receivables 205,000
to temporarily restricted contributions 205,000
12 cash a/c 225,250
to plant acquisition restricted contributions 225,250
13 operating expenses utilities 161,100
operating expenses insurance 93,600
to accounts payable 254,700
14 operating expenses depreciation 231,000
accumulated equipment depreciation 231,000
15 accounts payable a/c 213,900
to cash 213,900
16 operating expenses wages and benefits 839,100
cash 839,100
17 cash a/c 1,214,000
to patient account receivable 1,214,000

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