Question

The Edwards Lake Community Hospital balance sheet as of December 31, 2017, follows.

EDWARDS LAKE COMMUNITY HOSPITAL
Balance Sheet
As of December 31, 2017
Assets
Current assets:
Cash and Cash Equivalents						$	272,600
Accounts and notes receivable (net of uncollectible accounts of $15,900)							26,600
Inventory							72,600
Total current assets							371,800
Assets limited as to use:
Cash		$	17,240
Investments			229,720
Total assets limited as to use							246,960
Property, plant, and equipment:
Land			210,600
Buildings (net of accumulated depreciation of $1,623,100)			2,893,500
Equipment (net of accumulated depreciation of $1,024,600)			1,859,000
Total property, plant, and equipment							4,963,100
Total assets						$	5,581,860
Liabilities and Net Assets
Current liabilities:
Accounts payable						$	19,300
Accrued payroll							45,200
Current portion of mortgage payable							505,000
Total current liabilities							569,500
Long-term debt—mortgage payable							2,510,000
Total liabilities							3,079,500
Net assets:
Unrestricted
Undesignated			2,083,260
Designated for plant			246,860
Temporarily restricted			172,240				2,502,360
Total liabilities and net assets						$	5,581,860

The following are the transactions of Edwards Lake Community Hospital during the fiscal year ended December 31, 2017.

(1)	Information related to accrual of revenues and gains is as follows:

Patient services revenue, gross	$	3,501,000
Charity care		211,760
Contractual adjustments to patient service revenues		1,521,000
Other operating revenues		998,950

(2)	Cash received includes:

Interest on investments in Assets Limited as to Use		7,450
Collections of receivables		2,961,100

(3)	Expenses of $891,500 were recorded in accounts payable and $1,454,990 in accrued payroll. Since some of the nursing expenses met a temporary net asset restriction, $94,500 was released from temporary restrictions.

Administration expenses		446,980
General services expenses		524,610
Nursing services expenses		1,031,900
Other professional services expenses		343,000

(4)	Cash paid includes:

Interest expense (allocated half to nursing services      and half to general services)	$	281,000
Payment on mortgage principal		505,000
Accounts payable for purchases		837,000
Accrued payroll		1,280,000

(5)	Interest of $1,230 accrued on investments in Assets Limited as to Use.

(6)	Depreciation charges for the year amounted to $117,500 for the buildings and $129,000 for equipment. Depreciation was allocated 45 percent to nursing services, 15 percent to other professional services and 20 percent to each administrative and general services.

(7)	Other information:
(a)	Provision for uncollectible receivables was determined to be adequate.
(b)	Supplies inventory balances:

	12/31/2016				12/31/2017
Administration	$	8,300			$	7,500
General services		9,000				9,500
Nursing services		17,500				17,000
Other professional        services		37,800				41,000
Totals	$	72,600			$	75,000

(c)	Portion of mortgage payable due within one year, $505,000.
(8)	A $665 unrealized loss on investments occurred.
(9)	Nominal accounts were closed. Necessary adjustments were made to increase the Net Assets—Unrestricted, Designated for Plant.

a-1.	Prepare journal entry for the preceding transactions during the fiscal year ended December 31, 2017, assuming that Edwards Lake Community Hospital is a not-for-profit hospital. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

      

Answer 1

A. Record in general journal form the effects of the following transactions during the fiscal year ended December 31, 2017, assuming that Edwards Lake Community Hospital is a not-for-profit hospital.
					Debits	Credits
	Account & Notes Receivable				2,978,950
	Contractual Adjustments				1,521,000
		Patient Service Revenues				3,501,000
		Other Operating Revenues				998,950
	Cash				2,961,100
	Asset Limited As to Use-Cash				7,450
		Account and Note Receivable				2,961,100
		Investment Income-Unrestricted				7,450
	Administration Expenses				446,980
	General Services Expenses				524,610
	Nursing Services Expense				1,031,900
	Other Professional Services Expense				343,000
		Account Payable				891,500
		Accrued Payroll				1,454,990
	Net Asset Released From Restriction - Temporarily Restricted					94,500
		Net Asset Released From Restriction - Unrestricted					94,500
	Nursing Services Expenses				140,500
	General Services Expenses				140,500
	Mortgage Payable				505,000
	Accounts Payable				837,000
	Accrued Payroll				1,280,000
		Cash				2,903,000
	1,230
	Assets Limited As to Use-Interest Receivable				1,230
		Investment Income-Unrestricted				1,230
	Administration Expenses				49,300
	General Services Expenses				49,300
	Nursing Services Expense				110,925
	Other Professional Services Expenses				36,975
		Accumulated Depreciation-Building				117,500
		Accumulated Depreciation-Equipment				129,000
	Inventory				2,400
	Administration Expenses				800
	Nursing Services Expenses				500
		Other Professional Services Expenses				3,200
		General Services Expenses				500
	Mortgage Payable				505,000
		Current Portion of Mortgage Payable				505,000
	Unrealized Loss on Investments				665
		Asset Limited As to Use-Investments				665
Closing Entry	Patient Services Revenue				3,501,000
	Other Operating Revenues				998,950
	Investment Income-Unrestricted				8,680
		Contractual Adjustment				1,521,000
		Administration Services Expenses				497,080
		General Services Expenses				713,910
		Nursing Services Expenses				1,283,825
		Other Professional Services Expenses				379,975
		Unrealized Loss on Investment				665
			Net Asset-Unrestricted, Undesignated			112,175
	Net Asset, Unrestricted, Undesignated				7,867
		Net Assets, Unrestricted, Designated for Pln				7,867
	Net Assets, Temporarily Restricted				94,500
	Net Assets Released from Restriction - Unrestricted				94,500
		Net Assets, Unrestricted				94,500
		Net Assets Released from Restriction - Temporarily Restricted				94,500