Reference no: EM131947636
Question 1.
- restricted for educational programs relating to preservation of wetlands $16,000.
- restricted for future equipment purchases $18,000 (Fixed assets are recorded as unrestricted when acquired) and
- a promise to provide $5,000 each of the next six years for general support. Assume the pledge was made on December 31, 2014 and the present value of six (January 1) payments discounted at 5 percent is $25,378.
During the fiscal year ended December 31, 2015, the following transactions occur:
(a) The first $5,000 installment on the pledge receivable was received.
(b) Expenses related to educational programs on conservation of wetlands were incurred and paid in the amount of $19,900.
(c) The $18,000 received in a prior year for equipment, together with an additional $25,500 was used to acquire equipment.
(d) Interest of 5% is recorded on the remaining balance of the pledge receivable.
Required:
Prepare the journal entries necessary for the above transactions:
Question 2.
Record the following transactions on the books of Franklin College, a private college. All of the transactions are for the year 2015.
(a) The College received $315,000 in funds that were pledged in 2014, to be used for unrestricted purposes in 2015.
(b) The College was awarded $600,000 in grants that are to be used for restricted research purposes. $410,000 in cash was received, and $450,000 was expended on these projects.
(c) On Dec. 1, the College received a pledge of $6,000,000 to build a new basketball arena. The funds were not expended or received in 2015, but are expected to be received early in 2015.
(d) The College had received cash of $200,000 in 2014 to be used to purchase computer equipment for the student labs. The equipment was purchased and put into service in early January 2015. The equipment has a five-year life and the College follows the practice of maintaining the balance of fixed assets (net of depreciation) in the temporarily restricted net asset category.
(e) On Dec. 31, the College received an unrestricted pledge to receive $20,000 per year each year for six years, beginning on December 31, 2015. The first installment of $20,000 was received on that date. The discount rate is 6%. The present value of six payments of $20,000 is $104,248.
St. Martha's Hospital, a private not-for-profit, began the year 2015 with the following trial balance:
|
Cash
Patient Accounts Receivable
|
Debit |
Credit
|
|
604,000
620.000
|
|
|
Allowance for Contractual Adjustments
|
|
144.000
|
|
Property. Plant and Equipment - Net of Depreciation
|
800,000 |
|
|
Accounts Payable
|
|
540,000 |
|
Unrestricted Net Assets
|
|
1,100.000
|
|
Temporarily Restricted Net Assets
|
|
240.000
|
|
|
2,024,000 |
2,024.000
|
Transactions for 2015 are as follows:
(a) Collected $340,000 of the Patient Accounts Receivable that was outstanding at 12-31-2014. Actual contractual adjustments on these receivables totaled $152,000.
(b) The Hospital billed patients $2,350,000 for services rendered. Of this amount, 7% is expected to be uncollectible. Contractual adjustments with insurance companies are expected to total $831,000. (Hint: use an allowance account to reduce accounts receivable for estimated contractual adjustments).
(c) In 2014 the Hospital had received a contribution of $240,000 to purchase new ultrasound equipment. The equipment was purchased for $300,000 in 2015.
(d) Charity care in the amount of $60,000 (at standard charges) was performed for indigent patients.
(e) The Hospital received $700,000 in securities to establish a permanent endowment. Income from the endowment is unrestricted.
(f) Other revenues collected in cash were: gift shop $11,000 and cafeteria $33,000.
(g) The Hospital received in cash unrestricted interest income on endowments of $5,000. Unrealized gains on endowment investments totaled $7,000.
(h) Expenses amounting to $1,120,000 for Professional Care of Patients, $310,000 for General Services, and $190,000 for Administration were paid in cash.
(i) Depreciation on fixed assets, including the ultrasound equipment, totaled $124,000 for the year. ($90,000 for Professional Care of Patients, $18,000 for General Services, and $16,000 for Administration.)
(j) Closing entries were prepared.
Required:
A. Record the transactions described above.
B. Prepare in good form, a Statement of Operations for the year ended December 31, 2015.
C. Prepare in good form, a Statement of Changes in Net Assets for the year ended December 31, 2015.