Question

During 2020, the following transactions were recorded by the Port Community Hospital, a private sector not-for-profit institution:

1. Gross charges for patient services, all charged to Patient Accounts Receivable, amounted to $1,980,000. Estimated contractual adjustments with third-party payors amounted to $565,000 and the Hospital estimated implicit price concessions would total $28,000.

2. Charity services, not included in transaction 1, would amount to $102,000, had billings been made at gross amounts.

3. Other revenues, received in cash, were parking lot, $38,000; cafeteria, $62,000; gift shop, $14,000.

4. Cash gifts restricted by the donor for programs amounted to $41,300 for the year. During the year, $82,400 was expended for technician salaries supporting the program identified by the donor (debit Operating Expense—Salaries and Benefits).

5. During the year, the hospital received, in cash, unrestricted contributions of $67,200 and unrestricted income of $57,500 from endowment investments. (It is the hospital’s practice to treat unrestricted gifts as nonoperating income.)

6. New equipment, costing $188,000, was acquired, using donor-restricted cash that was on hand at the beginning of the year.

7. An old piece of lab equipment that originally cost $230,000 and that had an undepreciated cost of $46,000 was sold for $25,000 cash.

8. Cash contributions were received from donors restricted for plant acquisition, $228,500.

9. Bills were received for the following items: Utilities $162,400 and Insurance $94,400. These will be paid in January of 2021.

10. Depreciation of plant and equipment amounted to $234,000.

11. Cash payments on accounts payable amounted to $216,600. Another $841,400 was expended on wages and benefits.

12. Cash collections of patient accounts receivable amounted to $1,216,000. These were in settlement of patient accounts totaling $1,677,000. Contractual adjustments associated with these totaled $436,000 and price concessions totaled $25,000.

Prepare journal entries to record the above transactions.

Answer 1

Journal entries Amount (In 8 Patient Services AIC Dr Contract Ray ment All N To Accounts Recerreble (Being Payments neede 1,980,000 5,37,000 9,517,00 recorded) . 102,000 Charity Do To Accounts Recerrable (being Charty mede are recorded) 9. 114,000 Cash AIC at To Parking fees To Cofeteria To gift shop Cash Revenue 88,000 62,000 14,000 a books) (being recorded 4. Salares & Benefits Dr cash (being gift & salares 123,700 123,700 are recorded) 124,700 Cash Dr To Other Income (beiney Cash Pneome 124 Too Recerred)

Equipment Cosh (bening evipment prin 188,000 188,000 Purchased for cash) Cash All at Depreciation Dr Loss on sale Dr Lab exopment (being asset hold 25,000 184,000 2,000 230,000 for Coch) Cash Dr 228,500 Restorcted donation 228,500 cash donation Recered) (being Utlities All sh 162400 Insurance Alcah 94400 To oulstandey ep (being superses Recorded) 257800 Deprection All as 234000 To Plant & equipment (being deprecation charged on Plant & ap) 234000 216,600 841, 400 Accounts kayable Dr wages & benefit Dr To Cosh All (being Payment Mede 1058,0 i cash i

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