Question

E16-17 Various Unrelated Transactions [LO 16-4]

Following are several unrelated transactions involving a hospital.

1.	The hospital has a contractual agreement with a lender requiring that $600,000 in cash be set aside to meet its future debt payment.
2.	The hospital accrued $1,600,000 in patient service revenues. Charity services of $465,000 were also provided. Contractual adjustments total $585,000.
3.	An increase of $55,000 was recorded for bad debts.
4.	General services of $200,000 were donated by technicians. Normally, the hospital would have purchased these specialized services.
5.	An endowment contribution of $1,600,000 was received.
6.	Investments held by the hospital increased in fair value by $42,000.
7.	The hospital purchased $847,000 in equipment with resources that had been contributed in prior years for such a purchase. Required a. Prepare journal entries to record the foregoing transactions, assuming the hospital is a not-for-profit facility. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) b. Prepare journal entries to record the foregoing transactions, assuming the hospital is a business-type government facility. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

Accounts Title & Explanation	Debit	Credit
Assets limited as to use - cash	$600000
Cash		$600000
Accounts & Notes Receivable ($1600000 - $585000)	$1015000
Contractual Adjustments	$585000
Revenue Patient Service Service		$1600000
Revenue Deduction – Charity	$465000
Accounts & Notes Receivable		$465000
Revenue Deduction – Contractual Adjustment	$585000
Accounts & Notes Receivable		$585000
Provision for Bad Debts	$55000
Allowance for Uncollectible Receivable		$55000
General Service Expense	$200000
Contribution - Unrestricted		$200000
Cash	$1600000
Contribution - Permanently Restricted		$1600000
Investment	$42000
Unrealized gain – change in fair value		$42000
Equipment	$847000
Cash		$847000