Homework answers / question archive / 1

1

Finance

Share With

---

1. Which of the following entities would consider portions of the AICPA Audit and Accounting Guide Health Care Entities category b authoritative guidance?

2. A not-for-profit hospital would present all of the following financial statements except a

3. Which of the following is a true statement regarding a performance indicator?

4. Fees received by a hospital for a “healthy heart” workshop offered to patients should be reported as:

5. Which of the following is an example of an asset limited as to use?

6. Wellness Psychiatric Clinic received a large contribution from the family of a former patient. The contribution came with a request that the funds be used or invested to support any activities that the clinic felt would be best. On this not-for-profit clinic’s statement of cash flows, this contribution would be reported in which section?

7. The Patient Protection and Affordable Care Act, passed in 2010

8. Which of the following would be most useful for evaluating the financial profitability of a not-for-profit health care organization?

9. During its current fiscal year, Evanston General Hospital, a not-for-profit health care organization, had the following revenue-related transactions (amounts summarized for the year).
 

1. Services provided to inpatients and outpatients amounted to $9,708,000, of which $459,000 was for charity care; $937,000 was paid by uninsured patients; and $8,312,000 was billed to Medicare, Medicaid, and insurance companies.
2. Donated pharmaceuticals and medical supplies valued at $274,000 were received and utilized as general expenses.
3. Medicare, Medicaid, and third-party payors (insurance companies) approved and paid $5,374,000 of the $8,312,000 billed by the hospital during the year (see transaction 1).
4. An unconditional contribution of $5,090,000 was received in cash from a donor to construct a new facility for care of Alzheimer's patients. The full amount is expendable for that purpose. No activity occurred on this project during the current year.
5. A total of $1,082,000 was received from the following activities/sources: cafeteria and gift shop sales, $800,000; medical seminars, $134,000; unrestricted transfers from the Evanston General Hospital Foundation, $84,000; and fees for medical transcripts, $64,000.
6. Uncollectible accounts totaling $4,150 were written off. The allowance for uncollectible receivables was increased by $5,670.

 
Required

1. Prepare journal entries for the preceding transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

 

b. Prepare the revenues, gains, and other support without donor restrictions section of Evanston General Hospital’s statement of operations for the current year.

10. The Edwards Lake Community Hospital balance sheet as of December 31, 2019, follows:

EDWARDS LAKE COMMUNITY HOSPITAL
Balance Sheet
As of December 31, 2019
Assets
Current assets:
Cash and Cash Equivalents						$	512,000
Accounts and notes receivable (net of uncollectible accounts of $17,700)							28,400
Inventory							101,400
Total current assets							641,800
Assets limited as to use:
Cash		$	19,040
Investments			238,720
Total assets limited as to use							257,760
Property, plant, and equipment:
Land			219,600
Buildings (net of accumulated depreciation of $1,624,900)			2,902,500
Equipment (net of accumulated depreciation of $1,026,400)			1,862,600
Total property, plant, and equipment							4,984,700
Total assets						$	5,884,260
Liabilities and Net Assets
Current liabilities:
Accounts payable						$	21,100
Accrued payroll							48,800
Current portion of mortgage payable							595,000
Total current liabilities							664,900
Long-term debt—mortgage payable							2,690,000
Total liabilities							3,354,900
Net assets:
Without donor restrictions
Undesignated			2,092,260
Designated for plant			255,860
With donor restrictions			181,240				2,529,360
Total liabilities and net assets						$	5,884,260

 

The following are the transactions of Edwards Lake Community Hospital during the fiscal year ended December 31, 2020.

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

Patient services revenue, gross	$	3,502,800
Charity care		220,760
Contractual adjustments to patient service revenues		1,539,000
Other operating revenues		1,002,550

 

(2) Cash received includes

Interest on investments in Assets Limited as to Use		9,250
Collections of receivables		2,965,800

 

(3) Expenses of $900,500 were recorded in accounts payable and $1,465,790 in accrued payroll. Because some of the nursing expenses met a net asset restriction, $103,500 was released from restrictions.
 

Administration expenses		455,980
General services expenses		529,110
Nursing services expenses		1,033,700
Other professional services expenses		347,500

(4) Cash paid includes:
 

Interest expense (allocated half to nursing services and half to general services)	$	299,000
Payment on mortgage principal		595,000
Accounts payable for purchases		840,600
Accrued payroll		1,289,000

(5) Interest of $2,130 accrued on investments in Assets Limited as to Use.
(6) Depreciation charges for the year amounted to $126,500 for the buildings and $138,000 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:

 

 

	12/31/2019					12/31/2020
Administration		$	13,700				$	11,100
General services			14,400					18,500
Nursing services			26,500					20,600
Other professional services			46,800					59,000
Totals		$	101,400				$	109,200

    
      (c) Portion of mortgage payable due within one year, $595,000.

(8) A $701 unrealized loss on investments occurred.
(9) Nominal accounts were closed. Necessary adjustments were made to increase the Net Assets—Without Donor Restrictions, Designated for Plant.

1. Required

a-1. Prepare journal entry for the preceding transactions during the fiscal year ended December 31, 2020, assuming that Edwards Lake Community Hospital is a not-for-profit hospital.

2. a-2. Prepare closing entries for the fiscal year ended December 31, 2020, assuming that Edwards Lake Community Hospital is a not-for-profit hospital.
3. b. Prepare a balance sheet as of December 31, 2020.
4. c-1. Prepare a statement of operations for the year ended December 31, 2020.
5. c-2. Prepare a statement of changes in net assets for the year ended December 31, 2020.
6. d. Prepare a statement of cash flows for the year ended December 31, 2020.