Cort Hospital was established as a nonprofit organization on January $1$ to take over the assets of an existing hospital. It had the following transactions during its calendar fiscal year.

$1.$ The hospital sold revenue bonds in the amount of $$40\mathrm{.}0$ million. The hospital received $$38\mathrm{.}0$ million

in cash from sale of the bonds. To provide security for payment of the debt service, the other $$2\mathrm{.}0$

million was deposited in an escrow account with a trustee. The trustee immediately invested

the cash in U$.$S$.$ Treasury bills.

$2.$ The physical assets of the existing hospital were purchased for $$35\mathrm{.}0$ million in cash.

The appraised values of the assets were as follows: land$$ $$3\mathrm{.}0$ million; buildings$$ $$28\mathrm{.}0$ million;

and equipment$$ $$4\mathrm{.}0$ million.

$3.$ The hospital provided services of $$20\mathrm{.}0$ million at its established rates to Medicare patients. Its

agreement with Medicare provided for contractual adjustments of $30$ percent against the

established rates. By year$-$end, the hospital had collected $$12\mathrm{.}5$ million against the billings.

$4.$ The hospital provided services of $$10\mathrm{.}0$ million at its established rates to patients insured by a third

party payer. Its agreement with the third party provided for contractual adjustments of $20$

percent from the established rates. It also provided for a retrospective adjustment, based on a cost

submission by the hospital $30$ days after the end of the year. By year$-$end, the hospital had collected

the entire amount that it was owed by the third$-$party payer. When it prepared its financial

statements, the hospital estimated that it owed the third party $$80,000,$ but the final settlement had

not yet been negotiated.

$5.$ The hospital provided services to members of an HMO at rates per member, per month, receiving

cash premiums totaling $$15\mathrm{.}0$ million for the year. The hospital$$s internal records showed

that, if billings had been made at its established rates, it would have charged the HMO $$18\mathrm{.}0$ million

for these services.

$6.$ The hospital provided care to charity patients amounting to $$2\mathrm{.}0$ million at its established billing

rates. It estimated the direct and indirect costs of that care to be $$1\mathrm{.}4$ million.

$7.$ The hospital provided care to self$-$pay patients in the amount of $$5\mathrm{.}0$ million at its established rates.

The hospital collected $$2\mathrm{.}0$ million against these billings. At year$-$end, the hospital received specific

adverse information about the ability of self$-$pay patients$$ financial condition which indicates they

will not be able to pay $40$ percent of the remaining amounts due.

$8.$ The hospital had the following functional expenses. Of the amounts shown, $$29\mathrm{.}0$ million was paid in

cash. $($Depreciation expense on the building and the equipment $($ $$1\mathrm{.}4$ million and $$0\mathrm{.}6$ million,

respectively, was included in the functional categories.$)$

Health care services $$22\mathrm{.}0$ million

Dietary services $$4\mathrm{.}0$ million

Maintenance expenses $$2\mathrm{.}0$ million

Administrative expenses $$3\mathrm{.}0$ million

$9.$ The hospital paid debt service of $$4\mathrm{.}0$ million on its bonds $($ $$1\mathrm{.}6$ million in amortization of principal

and $$2\mathrm{.}4$ million in interest$).$ It also made a year$-$end journal entry, reclassifying $$1\mathrm{.}6$

of long$-$term debt as current.

$10.$ The hospital recorded accrued expenses at year$-$end as follows:

Health care services $$2\mathrm{.}0$ million

Administrative expenses $$0\mathrm{.}5$ million

$11.$ The hospital paid $$1\mathrm{.}0$ million for a claims$-$made policy for medical malpractice insurance

through year$-$end. Because the policy did not transfer risk to the insurance carrier for incurred but

not reported $($IBNR$)$ claims, the hospital accrued $$300,000$ as a liability. $($Note: Charge the

expenses to the health care services function.$)$

$12.$ The hospital received a check from the trustee for $$100,000,$ representing earnings on the

investment made by the trustee with the escrow money. The investment income is available for the

hospital$$s general operations.

$13.$ The hospital received equity securities from a donor who specified that the securities$,$ together with

any earnings thereon, be used for the purpose of upgrading the hospital buildings. The securities

had a fair value of $$250,000$ when the donor made the gift. During the year, the hospital

received dividends of $$10,000$ on the securities$.$ At year$-$end, when the hospital prepared its

financial statements, the securities had a fair value of $$270,000.($Assume the hospital$$s accounting

policy provides for recording realized and unrealized gains and losses on restricted net assets in a

single account.$)$

$14.$ During $2019,$ the hospital created Cort Hospital Foundation, whose sole purpose is to obtain

donations for the hospital. At year$-$end, the foundation advised the hospital that it had received cash

donations of $$300,000.$ Of this amount, $$50,000$ did not contain donor restrictions,

and $$250,000$ was restricted for upgrading the hospital$$s equipment. At the hospital$$s

request, the foundation sent to the hospital the entire $$50,000$ of cash received from contributions

without donor restrictions.

a$)$ Prepare the necessary journal entries to record these transactions.