Question

A not-for-profit residential assisted living center engaged in the following transactions during the year.
Prepare appropriate journal entries.
1. It billed residents for $6,200,000. Of this amount it estimates that $3,000,000 will be paid by third-party providers at a rate of only 80 percent. Of the balance, it estimates that 2 percent will be uncollectible.
2. It collected $5,100,000.
3. It received a cash contribution of $100,000 to be used exclusively for residents' educational and cultural programs. Of this amount, it spent $80,000 on qualified activities during the year.
4. It earned interest and dividends of $40,000 (cash) on its endowment of $500,000. Income from the endowment is unrestricted. However, it is the policy of the center's board of trustees that only income greater than 2 percent of the principal balance will be available for expenditure. The balance will be retained in the endowment to compensate for inflation. Thus, only $30,000 of the income was made available for expenditure.
5. The market value of the endowment's investments increased by $10,000.
6. It recognized $250,000 of depreciation on its building and $80,000 on equipment.
7. It incurred other operating expenses of $5,300,000, of which $5,000,000 was paid in cash.



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  • CreatedAugust 13, 2014
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