Chapter 19, Problem 19.3E

(a)

To determine

Introduction: Journal entries is a systematic method of recording transactions as and when they occur. It is a summary of transactions divided into the debit and credit items that are recorded chronologically. It is an act of keeping and recoding all the transactions occurring in the business.

The journal entries in the general fund for each transaction and event given.

Answer to Problem 19.3E

Journal Entries

S.no	Date	Particulars	Debit (in $)	Credit (in$)
1		Accounts receivable	7,000,000
		Patient service revenue		7,000,000
2		Nursing service expenses	2,130,000
		Other professional service expense	1,250,000
		Fiscal service expense	249,000
		General service expense	1,570,000
		Bad debts expense	135,000
		Administration expense	230,000
		Depreciation expense	493,000
		Cash		4,792,000
		Allowance for uncollectibles		135,000
		Accumulated depreciation		493,000
		Accounts payable		218,000
		Inventory		230,000
		Donated services		189,000
3		Patient service revenue	240,000
		Accounts receivable		240,000
4		Cash	170,000
		Net assets released from program use restrictions		170,000
5		Cash	240,000
		Net assets released from equipment acquisition		240,000
6		Cash	150,000
		Contributions without donor restrictions		150,000
7		Cash	6,325,000
		Allowance for uncollectibles	65,000
		Accounts receivables		6,390,000
8		Investment securities	70,000
		Unrealized holding gain on investment securities		70,000

Explanation of Solution

1. Recording the patients services provided
2. Recording operating expenses against credit for expenses
3. Recording contractual adjustments against revenues
4. Recording the transfer from specific purpose funds
5. Recording funds received from equipment acquisition
6. Recording receipt of unrestricted gifts
7. Recording collection from account receivables
8. Recording the increase in fair market value of securities.

(b)

To determine

Introduction: The statement of operations is one from of financial statements that summarizes the company’s revenues and expenses for the entire reporting period. The statement of operations is also known as profit and loss account.

The journal entries in the general fund for each transaction and event given.

Answer to Problem 19.3E

Statement of Operations for the year ended 31 December, 20X6

S.no	Date	Particulars	Debit (in $)	Credit (in$)
1		Unrestricted revenues, gains and other supports:
		Net patient service revenue		6,390,000
		Contributions		150,000
		Net assets released from program use restrictions		200,000
		Total revenues, gains and supports:		6,740,000
		Expenses and losses:
		Nursing service expense	2,130,000
		Other professional service expense	1,250,000
		Fiscal service expense	249,000
		General service expense	1,570,000
		Bad debts expense	135,000
		Administrative expense	230,000
		Depreciation expense	493,000
		Total operating expenses
		Excess of operating revenues over operating expenses
		Unrealized gains designated in excess of amounts for current operations	240,000
		Net assets realized from restrictions used for the purchase of equipment		240,000

Explanation of Solution

All the items of revenues are credited showing an addition in the income of the organization and all the items of expenditure are debited showing a decrease in income of the business.