Question

The December 31, 2014 statement of net assets of Mosholu Medical Center, a major urban hospital and research center, is presented below. The following transactions and events occurred in 2015:


1. The hospital received unrestricted pledges of $372,600 and temporarily restricted pledges of $216,000. It collected all of the unrestricted pledges and $180,000 of the temporarily restricted pledges.
2. Cash gifts for juvenile diabetes research amounted to $25,000 for the year. During the year, $20,000 was expended for juvenile diabetes research.
3. The total services provided by the hospital to all patients during the year amounted to $1,270,697 at the hospital’s established billing rates. Based on the contracted rates with third-party payers, the hospital expects to collect approximately $889,488 (70 percent) of this amount. Due to current economic conditions, it expects that $133,423 (15 percent of the 70 percent) will have to be written off as bad debts.
4. It also provided $93,600 in charity care which it never expected to collect.
5. It collected $864,225 in patient accounts and it wrote off $90,000 of bad debts.
6. It earned other operating revenues from its parking garage of $1,000,000, cafeteria of $820,000, and gift shop of $610,000.
7. It earned $27,072 in investment income, of which $18,144 is unrestricted and $8,928 is temporarily restricted.
8. The hospital sold some of its securities to hire a well-known cancer researcher. It received $600,000 from investments that had a fair value of $550,000 at the time of the gift. The hospital records both realized and unrealized gains and losses on securities held in restricted net assets in a single account.
9. It purchased equipment for its new gastroenterology unit of $435,600, all of which was paid for with restricted resources.
10. It charged depreciation of $526,716.
11. Supplies were purchased in the amount of $800,000, all on account.
12. It incurred $775,170 in wages and salaries, of which it paid $765,000. The balance was accrued. It also incurred $360,000 in other operating expenses (including those of auxiliary enterprises), of which it paid $297,750. The balance was vouchered (and thereby credited to accounts payable).
13. The other operating expenses include insurance costs. However, under ‘‘retrospective’’ insurance policies, the hospital anticipates having to pay an additional $6,300 in premiums.
14. It incurred and paid $378,360 in costs related to restricted contracts and grants (amounts that were not included in any other expense category). It was reimbursed for $372,240 and expects to be reimbursed for the balance in the future. In addition, it received $5,400 in advances on other grants.
a. Prepare journal entries to record the transactions. Be sure to indicate whether each entry would affect unrestricted, temporarily restricted, or permanently restricted fund types.
b. Prepare a statement of activities for 2015 and a statement of financial position as of December 31, 2015.



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  • CreatedAugust 13, 2014
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