A local private not-for-profit health care entity incurred the following transactions during the current year. Record each of these transactions in appropriate journal entry form. Prepare a schedule calculating the change in unrestricted, permanently restricted, and temporarily restricted net assets. a. The organization’s governing board announced that $160,000 in previously unrestricted cash will be used in the future to acquire equipment. The funds are invested until the purchase eventually occurs. b. Received a donation of $80,000 with the stipulation that all income derived from this money be used to supplement nursing salaries. c. Expended $25,000 for medicines. It received the money the previous year as a restricted gift for this purpose. d. Charged patients $600,000, 80 percent of which is expected to be covered by third-party payors. e. Calculated depreciation expense of $38,000. f. Received interest income of $15,000 on the investments the board acquired in transaction (a). g. Estimated that $20,000 of current accounts receivable from patients will not be collected and that third-party payors will reduce the amounts owed by $30,000 because of contractual adjustments. h. Consumed the medicines acquired in (c). i. Sold the investments acquired in (a) for $172,000. Spent all restricted cash and $25,000 that previously had been given to the organization (with the stipulation that the money be used to acquire plant assets) for new equipment. j. Received pledges

JOURNAL ENTRIES

a) Debit investment $160,000 Credit Unrestricted Cash $160,000

b) Debit Permanent Restrictions cash $80,000 Credit Donations received $80,000

c) Debit Medicine Asset (on hand) $25,000 Credit $25,000 Restricted cash $25,000

d) Debit  Accounts receivables $600,000 Credit N.G.O Revenues $600,000

e) Debit depreciation $38,000 Credit Accumulated depreciation $38,000

f) Debit Restricted Cash $15,000 Credit Interest income $15,000

g) NO entry ( estimate and future action)

h) Medicine expense $25000 Credit Medicine asset $25000

i) Debit Restricted Cash $172,000 Credit Investment $160,000, Credit Gain on sale of investment $12,000

  Debit Equipment $187000 Credit Restricted cash $187000

j) no entry ( just promises)

UNRESTRICTED CASH

a) investment                      - 160000

RESTRICTED CASH (TEMPORAL)

c) Medicine                          -25000

f) Interest                              +15000

i) sold investment                + 172000

                                              = 162000

Restricted cash permanent

b) Donations                       +80000

Explanation:

EQUIPMENT = Temporal restricted cash = 162000+25000 = $187,000

The donation's money is restricted only to donations

1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

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