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 $ 485,400 Accounts and notes receivable (net of uncollectible accounts of $17,500) 28,200 Inventory 98,200 Total current assets 611,800 Assets limited as to use: Cash $ 18,840 Investments 237,720 Total assets limited as to use 256,560 Property, plant, and equipment: Land 218,600 Buildings (net of accumulated depreciation of $1,624,700) 2,901,500 Equipment (net of accumulated depreciation of $1,026,200) 1,862,200 Total property, plant, and equipment 4,982,300 Total assets $ 5,850,660 Liabilities and Net Assets Current liabilities: Accounts payable $ 20,900 Accrued payroll 48,400 Current portion of mortgage payable 585,000 Total current liabilities 654,300 Long-term debt—mortgage payable 2,670,000 Total liabilities 3,324,300 Net assets: Without donor restrictions Undesignated 2,091,260 Designated for plant 254,860 With donor restrictions 180,240 2,526,360 Total liabilities and net assets $ 5,850,660 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 $ 3,502,600 Charity care 219,760 Contractual adjustments to patient service revenues 1,537,000 Other operating revenues 1,002,150 (2) Cash received includes Interest on investments in Assets Limited as to Use 9,050 Collections of receivables 2,966,800 (3) Expenses of $899,500 were recorded in accounts payable and $1,464,590 in accrued payroll. Because some of the nursing expenses met a net asset restriction, $102,500 was released from restrictions. Administration expenses 454,980 General services expenses 528,610 Nursing services expenses 1,033,500 Other professional services expenses 347,000 (4) Cash paid includes: Interest expense (allocated half to nursing services and half to general services) $ 297,000 Payment on mortgage principal 585,000 Accounts payable for purchases 840,200 Accrued payroll 1,288,000 (5) Interest of $2,030 accrued on investments in Assets Limited as to Use. (6) Depreciation charges for the year amounted to $125,500 for the buildings and $137,000 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 $ 13,100 $ 10,700 General services 13,800 17,500 Nursing services 25,500 20,200 Other professional services 45,800 57,000 Totals $ 98,200 $ 105,400 (c) Portion of mortgage payable due within one year, $585,000. (8) A $697 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. 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. 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. b. Prepare a balance sheet as of December 31, 2020. c-1. Prepare a statement of operations for the year ended December 31, 2020. c-2. Prepare a statement of changes in net assets for the year ended December 31, 2020. d. Prepare a statement of cash flows for the year ended December 31, 2020.

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 $ 485,400 Accounts and notes receivable (net of uncollectible accounts of $17,500) 28,200 Inventory 98,200 Total current assets 611,800 Assets limited as to use: Cash $ 18,840 Investments 237,720 Total assets limited as to use 256,560 Property, plant, and equipment: Land 218,600 Buildings (net of accumulated depreciation of $1,624,700) 2,901,500 Equipment (net of accumulated depreciation of $1,026,200) 1,862,200 Total property, plant, and equipment 4,982,300 Total assets $ 5,850,660 Liabilities and Net Assets Current liabilities: Accounts payable $ 20,900 Accrued payroll 48,400 Current portion of mortgage payable 585,000 Total current liabilities 654,300 Long-term debt—mortgage payable 2,670,000 Total liabilities 3,324,300 Net assets: Without donor restrictions Undesignated 2,091,260 Designated for plant 254,860 With donor restrictions 180,240 2,526,360 Total liabilities and net assets $ 5,850,660 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 $ 3,502,600 Charity care 219,760 Contractual adjustments to patient service revenues 1,537,000 Other operating revenues 1,002,150 (2) Cash received includes Interest on investments in Assets Limited as to Use 9,050 Collections of receivables 2,966,800 (3) Expenses of $899,500 were recorded in accounts payable and $1,464,590 in accrued payroll. Because some of the nursing expenses met a net asset restriction, $102,500 was released from restrictions. Administration expenses 454,980 General services expenses 528,610 Nursing services expenses 1,033,500 Other professional services expenses 347,000 (4) Cash paid includes: Interest expense (allocated half to nursing services and half to general services) $ 297,000 Payment on mortgage principal 585,000 Accounts payable for purchases 840,200 Accrued payroll 1,288,000 (5) Interest of $2,030 accrued on investments in Assets Limited as to Use. (6) Depreciation charges for the year amounted to $125,500 for the buildings and $137,000 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 $ 13,100 $ 10,700 General services 13,800 17,500 Nursing services 25,500 20,200 Other professional services 45,800 57,000 Totals $ 98,200 $ 105,400 (c) Portion of mortgage payable due within one year, $585,000. (8) A $697 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. 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. 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. b. Prepare a balance sheet as of December 31, 2020. c-1. Prepare a statement of operations for the year ended December 31, 2020. c-2. Prepare a statement of changes in net assets for the year ended December 31, 2020. d. Prepare a statement of cash flows for the year ended December 31, 2020.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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			$	485,400
Accounts and notes receivable (net of uncollectible accounts of $17,500)				28,200
Inventory				98,200
Total current assets				611,800
Assets limited as to use:
Cash	$	18,840
Investments		237,720
Total assets limited as to use				256,560
Property, plant, and equipment:
Land		218,600
Buildings (net of accumulated depreciation of $1,624,700)		2,901,500
Equipment (net of accumulated depreciation of $1,026,200)		1,862,200
Total property, plant, and equipment				4,982,300
Total assets			$	5,850,660
Liabilities and Net Assets
Current liabilities:
Accounts payable			$	20,900
Accrued payroll				48,400
Current portion of mortgage payable				585,000
Total current liabilities				654,300
Long-term debt—mortgage payable				2,670,000
Total liabilities				3,324,300
Net assets:
Without donor restrictions
Undesignated		2,091,260
Designated for plant		254,860
With donor restrictions		180,240		2,526,360
Total liabilities and net assets			$	5,850,660

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	$	3,502,600
Charity care		219,760
Contractual adjustments to patient service revenues		1,537,000
Other operating revenues		1,002,150

(2) Cash received includes


Interest on investments in Assets Limited as to Use		9,050
Collections of receivables		2,966,800

(3) Expenses of $899,500 were recorded in accounts payable and $1,464,590 in accrued payroll. Because some of the nursing expenses met a net asset restriction, $102,500 was released from restrictions.


Administration expenses		454,980
General services expenses		528,610
Nursing services expenses		1,033,500
Other professional services expenses		347,000

(4) Cash paid includes:


Interest expense (allocated half to nursing services and half to general services)	$	297,000
Payment on mortgage principal		585,000
Accounts payable for purchases		840,200
Accrued payroll		1,288,000

(5) Interest of $2,030 accrued on investments in Assets Limited as to Use.
(6) Depreciation charges for the year amounted to $125,500 for the buildings and $137,000 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		$	13,100	$	10,700
General services			13,800		17,500
Nursing services			25,500		20,200
Other professional services			45,800		57,000
Totals		$	98,200	$	105,400

(8) A $697 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.

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.
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.
b. Prepare a balance sheet as of December 31, 2020.
c-1. Prepare a statement of operations for the year ended December 31, 2020.
c-2. Prepare a statement of changes in net assets for the year ended December 31, 2020.
d. Prepare a statement of cash flows for the year ended December 31, 2020.

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