Question: Select the correct response for each of the following Under

Select the correct response for each of the following.
Under its established rate structure, Dodge Hospital would have earned patient service revenue of $5,000,000 for the year ended December 31, 20X3. However, Dodge did not expect to collect this amount because of contractual adjustments of $500,000 to third-party payers. In May 20X3, Dodge purchased bandages from Hunt Supply Company at a cost of $1,000. However, Hunt notified Dodge that the invoice was being canceled and that the bandages were being donated. On December 31, 20X3, Dodge had board-designated assets consisting of $40,000 in cash and investments of $700,000.
1. For the year ended December 31, 20X3, how much should Dodge report as net patient service revenue?
a. $4,500,000.
b. $5,000,000.
c. $5,500,000.
d. $5,740,000.

2. For the year ended December 31, 20X3, Dodge should record the donation of bandages as
a. A $1,000 reduction in operating expenses.
b. A decrease in net assets released from restrictions.
c. An increase in unrestricted revenue, gains, and other support.
d. A memorandum entry only.

3. How much of Dodge’s board-designated assets should be included in unrestricted net assets?
a. $0.
b. $40,000.
c. $700,000.
d. $740,000.

4. Donated medicines that a hospital normally would purchase should be recorded at fair value and should be credited directly to
a. Unrestricted revenue.
b. Expense of medicines.
c. Fund balance.
d. Deferred revenue.

5. Which of the following would normally be included as revenue of a not-for-profit hospital?
a. Unrestricted interest income from an endowment fund.
b. An unrestricted gift.
c. Tuition received from an educational program.
d. All of the above.

6. An unrestricted gift pledge from an annual contributor to a not-for-profit hospital made in December 20X1 and paid in March 20X2 would generally be credited to
a. Contribution revenue in 20X1.
b. Contribution revenue in 20X2.
c. Other income in 20X1.
d. Other income in 20X2.

7. An organization of high school seniors assists patients at Lake Hospital. These student volunteers perform services that the hospital would not otherwise provide, such as wheeling patients in the park and reading to them. Lake has no employer–employee relationship with these volunteers, who donated 5,000 hours of service to Lake in 20X2. Assuming a minimum wage of $7.50, these services would amount to $18,750, and the estimated fair value of these services was $25,000. In Lake’s 20X2 statement of operations, what amount should it report as donated services?
a. $25,000.
b. $18,750.
c. $6,250.
d. $0.

8. Which of the following would be included in the unrestricted funds of a not-for-profit hospital?
a. Permanent endowments.
b. Term endowments.
c. Board-designated funds originating from previously accumulated income.
d. Funds designated by the donor for plant expansion and replacement funds.

9. During the year ended December 31, 20X1, Greenacre Hospital received the following donations stated at their respective fair values:
Essential specialized employee-type services from members of a religious group $100,000 Medical supplies restricted for indigent care from an association of physicians and used for such purpose in 20X1 30,000 How much total revenue from donations should Greenacre report in 20X1?
a. $0.
b. $30,000.
c. $100,000.
d. $130,000.

10. Johnson Hospital’s property, plant, and equipment (net of depreciation) consists of the following:
Land $ 500,000
Buildings 10,000,000
Movable equipment 2,000,000
What amount should it report as restricted assets?
a. $0.
b. $2,000,000.
c. $10,500,000.
d. $12,500,000.

11. Depreciation should be recognized in the financial statements of
a. Proprietary (for-profit) hospitals only.
b. Both proprietary and not-for-profit hospitals.
c. Both proprietary and not-for-profit hospitals only when they are affiliated with a college or university.
d. All hospitals, in a memorandum entry not affecting the statement of revenue and expenses.

12. On March 1, 20X1, Rowe established a $100,000 endowment fund, the income from which is to be paid to Central Hospital for general operating purposes. Central does not control the fund’s principal. The donor appointed Sycamore National Bank as trustee of this fund. What journal entry is required by Central to record the establishment of theendowment?

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