Question

1. The following are taken from the Chart of Accounts for the Veteran Community Hospital, a Voluntary Health & Welfare Organization (VHWO).  Prepare a Statement of Activities showing where each item would be placed on the financial statement.

Program Services – Counseling

Net Assets, December 31, 2001

Net Assets Released From Restrictions

Contributions

Program Service Fees

Support Expenses – Management

Change in Net Assets

Net Assets, December 31, 2000

Program Services – Outreach

Support Expenses – Fundraising

2. Record in general journal form the following selected transactions for Beckwith General Hospital, a nongovernmental, not-for-profit institution that follows the AICPA Audit and Accounting Guide.  

1. Gross charges for patient services rendered during the period amounted to $7,670,000, of which $550,000 represented charity care for indigent patients.

2. During the year, the provision for bad debts was set at $170.000 and contractual adjustments amounted to $235,000.

3. A wealthy donor donated $4,000,000 to construct a new cardiology wing on the hospital.

4. During the year, the new cardiology wing (see item 3) was one-half completed at a cost of $2,000,000.

Answer 1

1.

1	Program Services – Counseling	Shown in the expenditure side of Income and expenditure account
2	Net Assets, December 31, 2001	Shown as Closing balance of the Asset, in the Balance sheet as on 31-12-2001
3	Net Assets Released From Restrictions	It will be shown in the asset side of the balance sheet
4	Contributions	Shown in the Income side of Income and expenditure account
5	Program Service Fees	Shown in the Income side of Income and expenditure account
6	Support Expenses – Management	Shown in the expenditure side of Income and expenditure account
7	Change in Net Assets	Shown in the expenditure side of Income and expenditure account, As in head of Depriciation and amortisation
8	Net Assets, December 31, 2000	Shown as Closing balance of the Asset, in the comparative Balance sheet as on 31-12-2000
9	Program Services – Outreach	Shown in the expenditure side of Income and expenditure account
10	Support Expenses – Fundraising	Shown in the expenditure side of Income and expenditure account

2

S.no.	Particulers		Amount(in $)		Explanation
			Debit	Credit
1	Bank/ Cash A/C Dr.		76150000		According to AICPA rules, Charity care niether to be shown as bad debts nor as expence, rather it will be shown as disclosure to the notes to the accounts
		To Income A/c		76150000
2	Income and Exp. A/c Dr.		65000		Difference amount between contractual adjustment and PFBD to be charge to I&E A/c, as PFDB.
		To Provision For bad Debts		65000
3	Bank A/c Dr.		4000000		Donation specific purpose will be credited to specific account
		To Cardiolodgy Wing Fund		4000000
4	Cardiolodgy Wing Fund A/c Dr.		2000000		All Expence to be meet regarding this specific purpose to be made from this fund only
		To Bank A/c		2000000

.