Acct 23000-Healthcare Organizations A local private not for profit

Task 1

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Healthcare Organizations A local private not for profit health care entity incurred the following transactions during the current year. Record each of these transactions in appropriate journal entry form.

Prepare a schedule calculating the change in unrestricted, permanently restricted, and temporarily restricted net assets.

a. The organization’s governing board announced that $160,000 in previously unrestricted cash will be used in the future to acquire equipment. The funds are invested until the purchase eventually occurs.

b. Received a donation of $80,000 with the stipulation that all income derived from this money be used to supplement nursing salaries.

c. Expended $25,000 for medicines. Organization received the money the previous year as a restricted gift for this purpose.

d. Charged patients $600,000, 80 percent of which is expected to be covered by third party payors.

e. Calculated depreciation expense of $38,000.

f. Received interest income of $15,000 on the investments the board acquired in transaction (a).

g. Estimated that $20,000 of current accounts receivable from patients will not be collected and that third

party payors will reduce the amounts owed by $30,000 because of contractual adjustments.

h. Consumed the medicines acquired in (c).

i. Sold the investments acquired in (a) for $172,000. Spent all restricted cash

(including [ f ] above) and $25,000 that previously had been given to the

organization (with the stipulation that the m

oney be used to acquire plant assets)

for new equipment. No time restriction was assumed on this equipment.

j. Received pledges for $126,000 in unrestricted donations. Of the pledges, 10

percent are collected immediately with 90 percent to be received and

used in

future years. Officials estimate that $9,000 of this money will never be collected.

Present value of the receivable is $98,000.

Task 2
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Nonprofit Universities
You are preparing a statement of activities for the University of Richland, a private not-for-
profit organization. The following questions should be viewed as independent of
each other.
Part 1
During the current year, a donor gives $400,000 in cash to the school and stipulates
that it must hold this money forever. However, any investment inco
me earned on this
money must be used for faculty salaries. During the current year, the investment earned
$31,000 and, of that amount, the school has expended $22,000 appropriately to date.
As a result of these events, what was the overall change in each of the following for the current year?
a. Unrestricted net assets.
b. Temporarily restricted net assets.
c. Permanently restricted net assets.