Exam 22: Accounting for Not-For-Profit Organizations

Marshfield Hospital is a private,not-for-profit hospital.The following transactions occurred: 1.Unrestricted cash gifts that were received last year,but designated for use in the current year,totaled $180,000.The cash gifts were used in the current year in accordance with restrictions. 2.Unrestricted pledges of $800,000 were received.Ten percent of the pledges typically prove uncollectible.Additional cash contributions during the year totaled $300,000. 3.Gifts in kind were received that were sold at a silent auction for $23,000.The fair value of the donated gifts in kind could not be reasonably determined. 4.Expenses were incurred and paid as follows: Salary of doctor,$190,000;facility rental,$36,000;purchases of supplies,$8,000;and utility costs,$10,000. 5.Marketable securities with a fair value of $650,000 were received as a donation with a stipulation that the hospital use the funds to purchase suitable land for the hospital. Required: Prepare journal entries for the aforementioned transactions.

In a not-for-profit,private university,the federal grant funds given directly to students for financial aid are an example of

Which of the following is not true?

Albatross University,a not-for-profit,nongovernmental university,had the following transactions in 2014. 1.Tuition bills were sent amounting to $8,000,000,with 70% collected before the end of the fiscal year;tuition waivers were granted on the total amount of $400,000,and $220,000 was expected to be uncollectible. 2.Cafeteria sales,all cash,were $1,400,000. 3.Salaries and wages were paid amounting to $5,500,000,of which $370,000 was for cafeteria staff. 4.Long-term debt payments were made from general funds amounting to $800,000,of which $130,000 was for interest. 5.Equipment was purchased for the engineering department with funds previously set aside for that purpose,amounting to $180,000. Required: Prepare the journal entries for 2014 for Albatross University.

On January 1,2011,a Voluntary Health and Welfare Organization (VHWO)receives an unconditional promise to give $6,000.The money is not collectible until 2012.The VHWO estimates that 10% of pledges are uncollectible.On January 1,2011,the VHWO will credit

In a nonprofit,nongovernmental hospital,courtesy allowances are

A gift-in-kind,for which the not-for-profit entity has no discretion on disposition,should be accounted for by the not-for-profit,nongovernmental entity as

Will Wealth made three charitable donations in 2014.Each was for $500,000,however they were made to three different organizations as follows: 1.Will donated to a local voluntary health and welfare organization (VHWO),and indicated that the funds could be used as the VHO wanted. 2.Will donated to a local private,not-for-profit university,designating the funds to be used for scholarships and student aid. 3.Will donated to the local not-for-profit,nongovernmental hospital,designating the funds to be used for purchase of diagnostic equipment. Required: For each of the above three situations: A.Prepare the journal entry that each organization would prepare at the time of the contribution. B.Prepare the journal entry that each organization would prepare at the time of the subsequent spending of the funds.Assume that the spending is in accordance with any restrictions that Will placed on the donation.

Match each of the following descriptions with the correct category for a private,not-for-profit hospital.Each term may be used more than once. ________ 1.Courtesy allowances provided to hospital patients ________ 2.Premium fees ________ 3.Fees paid to the doctors ________ 4.Charges to patients for patient services ________ 5.Wages paid to nursing staff ________ 6.Contractual allowances arranged with third-party payors ________ 7.Cafeteria sales ________ 8.Wages paid to hospital janitors ________ 9.Depreciation expense on hospital equipment ________ 10.Other operating revenue-unrestricted

The following information was taken from the accounts and records of the Community Chest Foundation,a private,not-for-profit VHWO organization.All balances are as of December 31,2014,unless otherwise noted. The unrestricted support from contributions was received in cash during the year.The expenses included $980,000 paid from temporarily-restricted cash donations. Required: Prepare Community Chest's Statement of Activities for the year ended December 31,2014.

Southtown Community Hospital (SCH)shows the following balances on its trial balance at June 30,2014,their fiscal year end.SCH is a not-for-profit,nongovernmental hospital.$260,000 cash was spent on equipment from donations restricted for that purpose. Required: Prepare a statement of operations for Southtown Community Hospital at June 30,2014.

Voluntary health and welfare organizations (VHWO)measure contributions at fair value unless

The gift shop of a nonprofit,private hospital has cash revenue of $24,000.What account will the hospital credit?

Voluntary health and welfare organizations must report expenses classified by

The Trasque Hospital is a nongovernmental,not-for-profit hospital.During 2014,they had the following transactions. 1.Trasque's standard charges for services rendered amounted to $550,000.Contractual adjustments on those amounts with third-party payors amounted to $230,000.Bad debts on the remaining balance are estimated to be 10%. 2.The hospital received a cash donation of $20,000 to be used for medical equipment. 3.The hospital also received rent from a local shelter that uses the basement of their facility for overflow housing,amounting to $6,000 per year. 4.The hospital paid the following costs: Professional fees (doctors and physician assistants),$80,000;Nursing services,$70,000;and administrative services,$40,000. 5.The hospital paid for pharmaceuticals and medical supplies amounting to $110,000.The hospital had an agreement with the pharmaceutical and medical supply vendors to carry all inventory on consignment,due to their not-for-profit status.As a result,items are only paid for as consumed,and all inventory belongs to the vendors. Required: Prepare the journal entries for Trasque for 2014.

A donor gives a Voluntary Health and Welfare Organization(VHWO)$1,000 cash that is restricted for a research project.What account does the VHWO credit when the VHWO receives the money?

A private,not-for-profit university received donations of $1,000,000 cash in 2014 that were restricted to certain research projects on sustainability,with an emphasis on reducing the campus waste.The university incurred and paid $450,000 of expenses on this research in 2011. In 2014,an alumnus contributed a $700,000 endowment for energy research with all endowment income restricted for that purpose.Income totaled $35,000 for the year.Energy research expenses incurred and paid were $22,000. Required: Prepare the appropriate journal entries for the university for these transactions.

Voluntary health and welfare organizations classify fund-raising costs as

An alumnus of a nonprofit,nongovernmental university establishes an endowment of $50,000.When the university receives the endowment from the donor,what account will the university credit?

Carousel Clothes is a voluntary health and welfare organization that provides gently-used second-hand clothes to those in need.They had the following transactions in 2014. 1.Cash gifts were received in the amount of $60,000,of which $13,000 had been pledged in the prior year. 2.Pledges made in the current year but not yet fulfilled amounted to $39,000.Ten percent of the pledges typically prove to be uncollectible.Pledges are made for 2014. 3.An office supply company donates office furniture to the VHWO.The fair value of the furniture is $40,000.No restrictions were placed on the donation. 4.The following expenses were incurred and paid: director's salary,$15,000;facility rental,$18,000;cleaning and repair costs for clothes,$29,000;and purchase of supplies consumed in tagging and distribution of clothes,$5,000.The director's salary is categorized as Support Services and the rest of the costs are Program Services. 5.Restricted pledges were received during the year for $450,000.The pledges are restricted for the construction of a new facility. Required: Prepare the journal entries for Carousel for 2014.