Various Unrelated Transactions. Following are several unrelated transac-tions in
ID: 2462207 • Letter: V
Question
Various Unrelated Transactions. Following are several unrelated transac-tions involving a hospital. 1. The hospital has a contractual agreement with a lender requiring that $500,000 in cash be set aside to meet its future debt payment. 2. The hospital accrued $1,500,000 in patient service revenues. Charity services of $415,000 were also provided. Contractual adjustments total $535,000. 3. An increase of $45,000 was recorded for bad debts. 4. General services of $100,000 were donated by technicians. Normally, the hospital would have purchased these specialized services. 5. An endowment contribution of $1,500,000 was received. 6. Investments held by the hospital increased in fair value by $32,000. 7. The hospital purchased $837,000 in equipment with resources that had been contributed in prior years for such a purchase. Required a. Prepare journal entries to record the foregoing transactions, assuming the hospital is a not-for-profit facility. b. Prepare journal entries to record the foregoing transactions, assuming the hospital is a business-type government facility.Explanation / Answer
Dr Cr 1 Cash A/c 500000 Lenders A/c 500000 (Being cash set aside for contractual payments) 2 Accrued Revenue 1500000 Sales 1500000 (Being Revenue Accrued) 3 Charity Expenses 415000 Cash A/c 415000 (Being charity expenses provided) 4 Cash A/c 35000 Leaders A/c 35000 (Being cash set aside for contactual payments) 5 Bad debt expense 45000 Debtors A/c 45000 (Being bad debt expense recorded) 6 Donations A/c 100000 Cash A/c 100000 (Being donation given by technicians) 7 Cash A/c 1500000 Endowment A/c 1500000 (Being payment received towards Endowment) 8 Equipment A/c 837000 Equipment Reserve A/c 837000 (Being reserve set up being used to buy the equipment)
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