Problem 19-1 The following events were recorded on the books of Mercy Hospital

| November 9, 2018

Problem 19-1
The following events were recorded on the books of Mercy
Hospital for the year ended December
31, 2012.
1.Revenue
from patient services totaled $16,000,000. The allowance for uncollectibles was
established at $3,400,000. Of the $16,000,000 revenue,
$6,000,000 was recognized under
cost reimbursement agreements. This revenue is subject to
audit and retroactive
adjustment by third-party payers (estimated adjustments
are included in the allowance
account).
2.Patient
service revenue is accounted for at established rates on the accrual basis.
3.Other
operating revenue totaled $346,000, of which $160,000 was from specific purpose
funds.
4.Mercy
received $410,000 in unrestricted gifts and bequests. They are recorded at fair
market
value when received.
5.Endowment
funds earned $160,000 in unrestricted income.
6.Board
designated funds earned $82,000 in income.
7.Mercy’s
operating expenses for the year amounted to $13,370,000. This included
$500,000 in straight-line depreciation.
Required:
Prepare
a statement of activities for Mercy Hospital for the year ended December 31,
2012.

Problem
19-3
partial statement of financial position of Century
University is shown below.
Century University
Partial Statement of Financial Position
June 30, 2011
Assets
Current Funds
Unrestricted
Cash $210,000
Accounts Receivable (less allowance for doubtful
accounts, $9,000) 341,000
State Appropriations Receivable 75,000
Total Unrestricted 626,000
Restricted
Cash 7,000
Investments 60,000
Total Restricted 67,000
Total Current $693,000
Liabilities and Fund Balances
Current Funds
Unrestricted
Accounts Payable $ 45,000
Deferred Revenues 66,000
Fund Balance 515,000
Total Unrestricted 626,000
Restricted
Fund Balance 67,000
Total Restricted 67,000
Total
Current $693,000
During the fiscal year ended June 30, 2008, the following
transactions occurred:
1.A
gift of $100,000 was received from an alumnus on July 7, 2011. One-half of the
gift was
to be used for the purchase of books for the university’s
library and the rest was to be used
to establish a scholarship fund per the alumnus’s
request. It was also requested that the
income generated by the scholarship fund be awarded
annually as a scholarship for a
qualified disadvantaged student. The board decided that
the funds for the new scholarship
should be invested in savings certificates on July 20,
2011. These savings certificates
were purchased on July 21, 2011.
2.Revenue
for the fiscal period from student tuition and fees amounted to $1,900,000.
During the fiscal year, $1,686,000 of this amount was
collected; $66,000 had been collected
in the prior year. The university had also received
$158,000 by June 30, 2012, for
fees for the session beginning July 1, 2012.
3.During
the year ended June 30, 2012, the university collected $349,000 of the
outstanding
accounts receivable at the beginning of the year. The
balance was determined to be
uncollectible and was written off against the allowance
account. At June 30, 2012, the
allowance account was increased by $3,000.
4.Because
of late student fee payments, $6,000 in interest charges were earned and
collected.
5.The
state appropriation was received. Another unrestricted appropriation of $50,000
was
made by the state. This had not been paid to the university
by the fiscal year-end.
6.An
unrestricted gift of $25,000 cash was received from alumni of the university.
7.During
the year, investments of $21,000 were sold for $26,000. Investment income
amounting to $1,900 was received.
8.Unrestricted
operating expenses were recorded at $1,777,000, $59,000 of which remains
unpaid.
9.Restricted
current funds of $13,000 were spent for authorized purposes during the year.
10.The
accounts payable at June 30, 2011, were paid during the year.
11.During
the year, $7,000 interest was earned and received on the savings certificates
purchased
in
accordance with the board’s resolution [in item (1)].
Required:
A.Prepare
journal entries to record in summary form the transactions above for the year
ended June 30, 2012. Each journal entry should be
numbered to correspond with the
transaction described above. Set up the following
headings:
Current Funds
Unrestricted Restricted Endowment Fund
Accounts Dr. Cr. Dr. Cr. Dr. Cr.
B.Prepare
a statement of activities for the year ended June 30, 2012.
C.Prepare
a statement of activities for the current funds for the year ended June 30,
2012.
Include
more details about the revenues and expenses.

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