Question

A local private not-for-profit health care entity (Rochester Medical) incurred the following transactions during the current year. The entity has one program service (health care) and two supporting services (fundraising and administrative).

1. The board of governors for Rochester Medical (RM) announces that $160,000 in previously unrestricted cash will be used in the near future to acquire equipment. These funds are invested until the purchase eventually occurs.
2. RM receives a donation of $80,000 in cash with the stipulation that the money be invested in U.S. government bonds. All subsequent income derived from this investment must be paid to supplement nursing salaries.
3. RM spends $34,000 in cash to acquire medicines. RM had received this money during the previous year. The donor had specified that it had to be used for medicines.
4. RM charges patients $2 million. These amounts are the responsibility of government programs and insurance companies. These third-party payors will receive explicit price concessions because of long standing contracts. Officials believe RM has an 80 percent chance of receiving $1.5 million and a 20 percent chance of receiving $1.0 million. RM has a policy of reporting the most likely outcome.
5. RM charges patients $1 million. These patients are not insured. RM sets implicit price concessions because of the high cost of health care. Officials believe RM has a 70 percent chance of collecting $250,000 and a 30 percent chance of receiving $100,000. As stated before, RM has a policy of reporting the most likely outcome.
6. RM charges patients $600,000. These patients have little or no income. The hospital administration chooses to view this work as charity care and make no attempt at collection.
7. Depreciation expense for the year is $110,000. Of that amount, 70 percent relates to health care, 20 percent to administrative, and 10 percent to fundraising.
8. RM receives interest income of $15,000 on the investments acquired in (a).
9. Based on past history, officials estimate that $59,000 of the reported receivable amount from third-party payors will never be collected. Of the amount reported by uninsured patients who are expected to pay a portion of their debt, officials estimate that $20,000 of the reported receivable amount will not be collected.
   The medicines in (c) are consumed through daily patient care.
10. RM sells the investments in (a) for $181,000 in cash. RM used that money plus the previously recorded interest income (along with $25,000 in cash given last year to RM with the donor stipulation that the money be used for equipment) to buy new equipment.
11. RM receives pledges near the end of the year totaling $200,000. Of that amount, $38,000 is judged to be conditional. The remaining $162,000 has a donor-stipulated purpose restriction. The present value of the $162,000 is calculated as $131,000.

Required:

a. Record each of these transactions in appropriate journal entry form. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in dollars not in millions of dollars.)

b. Prepare a schedule calculating the change in net assets without donor restrictions and net assets with donor restrictions. (Negative amounts should be indicated by a minus sign. Enter your answers in dollars not in millions of dollars.)

Assets With Donor Restrictions Assets Without Donor Restrictions Contribution revenue Patient service revenues Interest income Gain on sale of investments Reclassified from net assets with donor restrictions to net assets without donor restrictions Contributions, revenues, and reclassifications Expenses Healthcare Depreciation Bad debts Pharmaceutical Administrative Depreciation Fundraising Depreciation Total expenses Increase in net assets 0

I only need part b

Answer 1

S. No	Type of Entry	Particulars	Debit	Credit
a	Payment	Investment For Purchase of asset	1,60,000
		Cash		1,60,000
b	Receipt	Cash	80,000
		Revenue from Donations		80,000
c	Payment	Inventory	34000
		Cash		34000
d	Journal	Accounts receivable - Covered	20,00,000
		Revenue from Patients		20,00,000
e	Journal	Accounts receivable - Unconditional	10,00,000
		Revenue from Patients		10,00,000
f	Journal	Accounts Receivable - Uninsured	6,00,000
		Revenue from Patients		6,00,000
g	Journal	Depreciation Expenses	1,10,000
		Health Care		77,000
		Administration		22,000
		Fundering		11,000
h	Journal	Investment For Purchase of asset	15,000
		Interest on Investment		15,000
i	Journal	Bad debts Expenses - Health Care	79,000
		Accounts Receivables - Covered		59,000
		Account Receivables - Uninsured		20,000
j	Receipt	Cash	1,81,000
		Investment For Purchase of asset		1,75,000
		Profit on sale on Investment		6,000
	Payment	Assets	2,06,000
		Cash		2,06,000
k	Journal	Pledge Receivable	1,69,000
		Reclassified net assets without donor Restrictions		1,31,000
		Reclassified net assets with donor Restrictions		38,000