Week 7 Homework Lisa Chandler

Lisa Chandler Homework Week 7 ACCT567
D03435105 Prof. Dorothy Brandt

Problem 16-3. Private College Transactions
Elizabeth College, a small private college, had the following transactions in fiscal year 2011
1. Billings for tuition and fees totaled $5,600,000. Tuition waivers and scholarships of $61,500 were
granted. Students received tuition refunds of $101,670.
2. During the year the college received $1,891,000 cash in unrestricted private gifts, $575,200 cash
in temporarily restricted grants, and $1,000,000 in securities for an endowment.
3. A pledge campaign generated $626,000 in unrestricted pledges, payable in fiscal year 2012.
4. Auxiliary enterprises provided goods and services that generated $94,370 in cash.
5. Collections of tuition receivable totaled $5,380,000.
6. Unrestricted cash of $1,000,000 was invested.
7. The college purchased computer equipment at a cost of $10,580.
8. During the year the following expenses were paid:
9. Instruction provided $450,000 in services related to the temporarily restricted grant recorded in
transaction 2.
10. At year-end, the allowance for uncollectible tuition and fees was increased by $7,200. The fair
value of investments had increased $11,540; of this amount, $3,040 was allocated to
permanently restricted net assets, the remainder was allocated to unrestricted net assets.
Depreciation on plant and equipment was allocated $34,750 to instruction, $41,000 to auxiliary
enterprises, and $12,450 to academic support.
11. All nominal accounts were closed.
Required:
a. Prepare journal entries in good form to record the foregoing transactions for the fiscal
year ended June 30, 2011.
b. Prepare a statement of activities for the year ended June 30, 2011. Assume beginning net
asset amounts of $7,518,000 unrestricted, $200,000 temporarily restricted, and $5,000,000
permanently restricted.
a.
ELIZABETH COLLEGE
GENERAL JOURNAL
DEBITS CREDITS
1 TUITION RECEIVABLE 5,538,500
TUITION DISCOUNTS AND ALLOWANCES 61,500
TUITION AND FEES - UNRESTRICTED 5,600,000
TUITION AND FEES - UNRESTRICTED 101,670
TUITION RECEIVABLE 101,670
2 CASH 2,466,200
INVESTMENTS 1,000,000
CONTRIBUTIONS - UNRESTRICTED 1,891,000
CONTRIBUTIONS - TEMPORARILY RESTRICTED 575,200
CONTRIBUTIONS - PERMANENTLY RESTRICTED 1,000,000
3 PLEDGES RECEIVABLE 626,000
CONTRIBUTIONS - TEMPORARILY RESTRICTED 626,000
4 CASH 94,370
AUXILIARY ENTERPRISES - UNRESTRICTED 94,370
5 CASH 5,380,000
TUITION RECEIVABLE 5,380,000
6 INVESTMENTS 1,000,000
CASH 1,000,000
7 EQUIPMENT 10,580
CASH 10,580
8 INSTRUCTION EXPENSE 3,866,040
ACADEMIC SUPPORT EXPENSE 1,987,000
STUDENT SERVICES EXPENSE 87,980
INSTITUTIONAL SUPPORT EXPENSE 501,130
AUXILIARY ENTERPRISES EXPENSE 92,410
CASH 6,534,560
9 INSTRUCTION EXPENSE 450,000
CASH 450,000
NET ASSETS RELEASED FROM RESTRICTIONS-TEMPORARILY RESTRICTED 450,000
NET ASSETS RELEASED FROM RESTRICTIONS-UNRESTRICTED 450,000
10 TUITION AND FEES-UNRESTRICTED 7,200
ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS 7,200
INVESTMENTS 11,540
UNREALIZED GAIN ON INVESTMENTS-UNRESTRICTED 8,500
UNREALIZED GAIN ON INVESTMENTS-PERMANENTLY RESTRICTED 3,040
INSTRUCTION EXPENSE 34,750
ACCUMULATED DEPRECIATION 88,200
DEBITS CREDITS
11 TO CLOSE NOMINAL ACCOUNTS:
TUITION AND FEES - UNRESTRICTED 5,491,130
CONTRIBUTIONS - UNRESTRICTED 1,891,000
AUXILIARY ENTERPRISES=UNRESTRICTED 94,370
UNREALIZED GAIN ON INVESTMENTS-UNRESTRICTED 8,500
TUITION DISCOUNTS AND ALLOWANCES 61,500
INSTRUCTION EXPENSE 4,350,790
ACADEMIC SUPPORT EXPENSE 1,999,450
STUDENT SERVICES EXPENSE 87,980
INSTITUTIONAL SUPPORT EXPENSE 501,130
NET ASSETS - UNRESTRICTED 350,740
CONTRIBUTIONS - TEMPORARILY RESTRICTED 1,201,200
NET ASSETS - TEMPORARILY RESTRICTED 1,201,200
CONTRIBUTIONS-PERMANENTLY RESTRICTED 1,000,000
UNREALIZED GAIN ON INVESTMENTS-PERMANENTLY RESTRICTED 3,040
NET ASSETS-PERMANENTLY RESTRICTED 1,003,040
TO RECLASSIFY NET ASSETS:
NET ASSETS - TEMPORARILY RESTRICTED 450,000
NET ASSETS RELEASED FROM RESTRICTIONS-UNRESTRICTED 450,000
NET ASSETS RELEASED FROM RESTRICTIONS-TEMPORARILY RESTRICTED 450,000
ELIZABETH COLLEGE
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2011
TEMPORARILY PERMANENTLY
UNRESTRICTE RESTRICTED RESTRICTED TOTAL

D
REVENUES AND GAINS:
Student tuition and fees $ 5,429,630 $ 5,429,630
(net)*
Contributions $ 1,891,000 $ 1,201,200 $ 1,000,000 $ 4,092,200
Auxiliary enterprise $ 94,370 $ 94,370
sales and services
Unrealized gain on $ 8,500 $ 3,040 $ 11,540
investments
Net assets released $ 450,000 $ (450,000) $ - $ -
from restrictions
TOTAL REVENUES AND $ 7,873,500 $ 751,200 $ 1,003,040 $ 9,627,740
GAINS
EXPENSES AND LOSSES:
Educational and general
expenses:
Instruction $ 4,350,790 $ 4,350,790
Academic support $ 1,999,450 $ 1,999,450
Student services $ 87,980 $ 87,980
Institutional Support $ 501,130 $ 501,130
TOTAL EDUCATIONAL $ 6,939,350 $ - $ - $ 6,939,350
AND GENERAL EXPENSE
Auxiliary enterprises $ 133,410 $ 133,410
Total expenses and $ 7,072,760 $ - $ - $ 7,072,760
losses
Total change in net $
assets $ 800,740 1,003,040 $ 2,554,980
Net assets, beginning of
the year 7,518,000 200,000 5,000,000 12,718,000
net assets, end of the
year 8,318,740 951,200 6,003,040 15,272,980
Problem 16-4. Public University Transactions
The Statement of Net Assets of Green Tree State University, a governmentally owned university, as of the
end of its fiscal year June 30, 2010, follows.
The following information pertains to the year ended June 30, 2011:
1. Cash collected from students’ tuition totaled $3,000,000. Of this $3,000,000, $362,000 represented
accounts receivable outstanding at June 30, 2010; $2,500,000 was for current-year tuition; and $138,000
was for tuition applicable to the semester beginning in August 2011.
2. Deferred revenue at June 30, 2010, was earned during the year ended June 30, 2011.
3. Notification was received from the federal government that up to $50,000 in funds could be received
in the current year for costs incurred in developing student performance measures.
4. During the year, the University received an unrestricted appropriation of $60,000 from the state.
5. Equipment for the student computer labs was purchased for cash in the amount of $225,000.
6. During the year, $200,000 in cash contributions was received from alumni. The contributions are to be
used for construction of a new library.
7. Interest expense on the bonds payable in the amount of $48,000 was paid.
8. During the year, investments with a carrying value of $25,000 were sold for $31,000. Investments
were purchased at a cost of $40,000. Investment income of $18,000 was earned and collected during the
year.
9. General expenses of $2,500,000 related to the administration and operation of academic programs,
and research expenses of $37,000 related to the development of student performance measures were
recorded in the voucher system. At June 30, 2011, the accounts payable balance was $75,000.
10. Accrued liabilities at June 30, 2010, were paid.
11. At year-end, adjusting entries were made. Depreciation on capital assets totaled $90,000. Accrued
interest on investments was $1,250. The fair value of investments at year-end was $262,000. The
Allowance for Doubtful Accounts was adjusted to $17,000.
12. Nominal accounts were closed and net asset amounts were reclassified as necessary.
Required
a. Prepare journal entries in good form to record the foregoing transactions for the year ended June 30,
2011.
b. Prepare a statement of net assets for the year ended June 30, 2011.
GREEN TREE STATE UNIVERSITY

GENERAL JOURNAL
DEBITS CREDITS
1 CASH 3,000,00
0
ACCOUNTS RECEIVABLE - TUITION AND FEES 362,000
REVENUES - TUITION AND FEES 2,500,00
0
DEFERRED REVENUE - TUITION AND FEES 138,000
2 DEFERRED REVENUE - TUITION AND FEES 25,000
REVENUES - TUITION AND FEES 25,000
3 NO JOURNAL ENTRY IS RECORDED - THE ELIGIBILITY
REQUIREMENT HAS NOT BEEN MET
4 CASH 60,000
REVENUES - STATE APPROPRIATIONS 60,000
5 CAPITAL ASSETS 225,000
CASH 225,000
6 CASH 200,000
REVENUES - GIFTS & GRANTS 200,000
7 EXPENSES - INTEREST 48,000
CASH 48,000
8 CASH 31,000
INVESTMENTS 25,000
REVENUES - CHANGES IN FAIR VALUE OF INVESTMENTS 6,000
INVESTMENTS 40,000
CASH 40,000
REVENUES - INVESTMENT INCOME 18,000
9 EXPENSES - GENERAL 2,500,00
0
EXPENSES - RESEARCH 37,000
ACCOUNTS PAYABLE 2,537,00
0
0
0
GRANT RECEIVABLE 37,000
1 ACCRUED LIABILITIES 40,000
0
CASH 40,000
1 EXPENSES - DEPRECIATION 90,000
1
ACCUMULATED DEPRECIATION 90,000
INTEREST RECEIVABLE 1,250
INVESTMENTS 3,000
PROVISION FOR BAD DEBTS 2,000
ALLOWANCE FOR DOUBTFUL ACCOUNTS 2,000
1 REVENUES - TUITION AND FEES 2,525,00
2 0
REVENUES - STATE APPROPRIATIONS 60,000
EXPENSES - DEPRECIATION 90,000
EXPENSES - INTEREST 48,000
EXPENSES - GENERAL 2,500,00
0
EXPENSES - RESEARCH 37,000
To reclassify Net Assets:
NET ASSETS - INVESTED IN CAPITAL ASSETS, NET OF 135,000
RELATED DEBT
NET ASSETS - RESTRICTED 200,000
GREEN TREE STATE UNIVERSITY

STATEMENT OF NET ASSETS
AS OF JUNE 30, 2011
DEBITS CREDITS
ASSETS:
CASH 729,000
ACCOUNTS RECEIVABLE (NET OF DOUBTFUL
ACCOUNTS OF $17,000) 6,000
INTEREST RECEIVABLE 1,250
GRAND RECEIVABLE 37,000
INVESTMENTS 262,000
1,975,00
CAPITAL ASSETS 0
(365,000 1,610,00
ACCUMULATED DEPRECIATION ) 0
2,645,25
TOTAL ASSETS 0
LIABILITIES:
ACCOUNTS PAYABLE 75,000
DEFERRED REVENUE 138,000
BONDS PAYABLE 600,000
TOTAL LIABILITIES 813,000
NET ASSETS:
1,010,00
INVESTED IN CAPITAL ASSETS, NET OF RELATED DEBT 0
RESTRICTED 415,000
UNRESTRICTED 407,250
1,832,25
TOTAL NET ASSETS 0
Problem 17-6. Governmental Hospital
During 2011, the following selected events and transactions were recorded by Nichols County Hospital.
1. Gross charges for hospital services, all charged to accounts and notes receivable, were as
follows:
2. After recording patient service revenues, it was determined that $52,000 related to charity care.
3. Additional information relating to current-year receivables and revenues is as follows:
4. During the year, the hospital received unrestricted cash contributions of $50,000 and
unrestricted cash income from endowment investments of $6,500.
5. A federal cost reimbursement research grant of $350,000 was awarded. As of the end of the
year, $200,000 in expenses related to the grant had been made. (Hint: See Chapter 4for eligibility
requirements.)
6. New equipment costing $39,000 was acquired from donor-restricted cash. An X-ray machine that
cost $31,000 and had a book value of $2,400 was sold for $500 cash.
7. Vouchers totaling $1,340,200 were issued for the following items:
8. Collections of accounts receivable totaled $1,159,000. Accounts written off as uncollectible

amounted to $11,900.
9. Cash payments on vouchers payable (paid to employers and suppliers) during the year were
$1,031,200.
10. Supplies of $68,000 were issued to nursing services.
11. On December 31, 2011, accrued interest income on investments was $800.
12. Depreciation of buildings and equipment was as follows:
13. On December 31, 2011, closing entries were made in the general journal.
Required
a. Show in general journal form the entries that should be made for each of the transactions and
the closing entries in accordance with the standards for a governmental health care entity that
follows proprietary fund accounting, as discussed in this chapter and Chapter 7.
b. Using the available information, calculate the net patient service revenue that would be
reported on the statement of revenues, expenses, and changes in net assets.
NICHOLS COUNTY HOSPITAL
GENERAL JOURNAL
FOR THE YEAR 2011
DEBITS CREDITS
1 ACCOUNTS AND NOTES RECEIVABLE 1,364,900
PATIENT SERVICE REVENUES 1,364,900
2 PATIENT SERVICE REVENUES 52,000
ACCOUNTS AND NOTES RECEIVABLE 52,000
TUITION RECEIVABLE
3 CONTRACTUAL ADJUSTMENTS 632,000
ACCOUNTS AND NOTES RECEIVABLE 632,000
ALLOWANCE FOR UNCOLLECTIBLES 30,200
4 CASH 56,500
CONTRIBUTIONS - RESTRICTED 50,000
INVESTMENT INCOME - UNRESTRICTED 6,500
5 RESEARCH EXPENSES 200,000
CASH 200,000
CASH 200,000
CONTRIBUTIONS - UNRESTRICTED 200,000
6 EQUIPMENT 39,000
CASH 39,000
CASH 500
LOSS ON DISPOSAL OF EQUIPMENT 1,900
ACCUMULATED DEPRECIATION - EQUIPMENT 28,600
EQUIPMENT 31,000
7 FISCAL AND ADMINISTRATIVE SERVICE EXPENSES 241,800
GENERAL SERVICES EXPENSES 253,100
NURSING SERVICES EXPENSES 585,000
OTHER PROFESSIONAL SERVICES EXPENSES 185,600
INVENTORY 67,500
ACCRUED EXPENSES PAYABLE 7,200
VOUCHERS PAYABLE 1,340,200
8 CASH 1,159,000
ALLOWANCE FOR UNCOLLECTIBLES 11,900
ACCOUNTS AND NOTES RECEIVABLE 1,170,900
9 VOUCHERS PAYABLE 1,031,200
CASH 1,031,200
1 NURSING SERVICES EXPENSES 68,000
0
INVENTORY 68,000
1 ACCRUED INTEREST RECEIVABLE 800
1
INVESTMENT INCOME - UNRESTRICTED 800
1 DEPRECIATION EXPENSE 124,000
2
ACCUMULATED DEPRECIATION - BUILDINGS 51,000
ACCUMULATED DEPRECIATION - EQUIPMENT 73,000
1 Closing Entries:
3
PATIENT SERVICE REVENUES 1,312,900
INVESTMENT INCOME 7,300
CONTRIBUTIONS - UNRESTRICTED 250,000
*NET ASSETS - UNRESTRICTED 751,400
CONTRACTUAL ADJUSTMENTS 632,000
RESEARCH EXPENSES 200,000
FISCAL AND ADMINISTRATIVE SERVICES EXPENSES 241,800
GENERAL SERVICE EXPENSES 253,100
NURSING SERVICES EXPENSES 653,000
OTHER PROFESSIONAL SERVICES EXPENSES 185,600
DEPRECIATION EXPENSE 124,000
LOSS ON DISPOSAL OF EQUIPMENT 1900
Net patient service revenue would be:

Patient service revenue adjusted for charity care
1,312,90
(transactions 1 and 2) 0
less: contractual adjustments (632,000)
net patient service revenue 680,900
Problem 17-7. Not-for-profit Hospital Financial Statement Analysis
Examine the financial statements for Oak Valley Hospital for the years ended December 31, 2010, and
2011.
Required
Prepare a short answer to address each of the following questions.

a. Discuss the relative importance of different classifications of assets to total assets. What
additional information would you expect to find in the notes to the financial statements about
major classification of assets?
b. Describe how net patient service revenue likely differs from gross patient revenue.
c. Did this hospital have a profitable year? Why or why not?
d. What is the best explanation for the change in cash for the most recent year? For the previous
year?
a. For 2011 Current Assets are 10.4% of Total Assets, down a bit from 11.2% of the previous year.
This not-for-profit hospital also has a high amount of Assets with Limited Use, representing
32.9% of Total Assets in 2011 and 31.4% in the prior year. Other noncurrent assets, such as
Investments, and Property and Equipment are 56.6% of Total Assets in 2008 and 54.7% the prior
year. It is not surprising that the hospital carries a relatively large investment of assets in the
form of buildings and specialized equipment.
We expect that the “Capital Assets” notes to the financial statements will provide detail similar
to that found in for-profit financial statements, including information on capitalization policies,
the basis for valuation, depreciation methods, and estimated service lives. Additionally, any
information related to donor-imposed restrictions should be disclosed in the notes. Since the net
asset categories are not shown on the fact of the financial statements, the notes should break
net assets into three categories: unrestricted, temporarily restricted, and permanently restricted
(note: this is a nongovernmental not-for-profit hospital following SFAS No. 117).
b. Net patient revenue should be the gross charge to patients for each service the hospital
provides, less any patient discounts, less any contractual adjustments (or allowances) due to
agreed upon charges to certain third-party payors (medicare, other health insurance
companies). Charity service and bad debt expense do not explain the difference between gross
and net patient revenue. Charity service is merely disclosed in the notes to the financial
statements, and bad debts expense is reported as an operating expense.
c. For 2011, the net assets decreased by $65,283 so you could say this hospital did not have a
profitable year. The prior year, however, was profitable as revenues exceeded expenses by
$27,983. This information appears on the statement of operations. Of course, further analysis of
operating and non-operating items will assist the reader in determining the profitability of the
organization.
d. Cash increased by $14,666 in 2011 because cash flows from operations were positive. In 2010,
there was a decrease in cash and cash equivalents of $1,728 primarily because cash flows from
investing activities was a negative $128,331 and, although cash flows from operations and
financing activities were positive, they were relatively small amounts.

Week 7 Homework Lisa Chandler

Uploaded by

Copyright:

Available Formats

Week 7 Homework Lisa Chandler

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Week 7 Homework Lisa Chandler

Uploaded by

Copyright:

Available Formats

Lisa Chandler Homework Week 7 ACCT567

D03435105 Prof. Dorothy Brandt

UNRESTRICTE RESTRICTED RESTRICTED TOTAL

10. Accrued liabilities at June 30, 2010, were paid.

GREEN TREE STATE UNIVERSITY

GREEN TREE STATE UNIVERSITY

8. Collections of accounts receivable totaled $1,159,000. Accounts written off as uncollectible

Net patient service revenue would be:

Prepare a short answer to address each of the following questions.

You might also like

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.