66. The following events occurred as part of operations in Hard Knocks (private) University:
a.
To construct a new computer center, the University floated at par a $10,000,000 10% serial bond issued on January 1, paying interest
December 31 and June 30.
b.
$100,000 for computer equipment was donated by a wealthy alumnus.
c.
Payments for construction to date total $5,000,000.
d.
Interest payments are made on June 30th.
e.
Construction of the center is completed at an additional cost of $7,000,000 and it is paid in full.
f.
On December 31, the first serial bond of $2,000,000 is paid along with the regular interest payment.
g.
A building valued at $100,000 is received as a gift on the condition the university assumes the $50,000 mortgage and uses the building for
classroom purposes only. The University elects to “release” the restriction over the useful life of the building.
h.
Depreciation on the building totaled $10,000.
Required:
Prepare journal entries for the above events.
Cash
10,000,000
Bond Payable
10,000,000
b.
Cash
100,000
Revenues—Temporarily Restricted Contributions
100,000
Construction In Progress
5,000,000
Cash
5,000,000
d.
Expenses Institutional Support—
Interest Expense (10,000,000 x 10% x .5)
500,000
Cash
500,000
Computer Center
12,000,000
Construction In Progress
5,000,000
Cash
7,000,000
Bond Payable
2,000,000
Expenses-Institutional Support-Interest Expense
500,000
Cash
2,500,000
g.
Building
100,000
Mortgage Payable
50,000
Revenues – Temporarily Restricted – Contributions
50,000
h.
of Plant—
Depreciation Expense
10,000
Accumulated Depreciation
10,000
Reclassification Out—
Temporarily Restricted—
Satisfaction of Plant Restrictions
10,000
Reclassification In—
Unrestricted Satisfaction
of Plant Restrictions
10,000
67. Consider the following events affecting Private University:
a.
A $2,000,000, 10% serial bond issue, paying interest semiannually, was sold at face value on an interest payment date. Proceeds of the
bond issue are to be used to add a wing to the library.
b.
A lot valued at $30,000 was donated by a former librarian to permit building of the proposed library wing. No permanent restrictions were
stipulated by the donor.
c.
The State Building Board approved the plans submitted by the architect, who was paid $20,000. A contract for $1,900,000 was signed for
construction of the library wing.
d.
The bond interest was paid.
e.
At year end, approximately two-thirds of the construction was completed. A payment of $1,200,000 was made to the contractor.
f.
Tuckpointing and other repairs to university buildings amounting to $35,000 were paid from resources previously provided specifically for
that purpose by a retired faculty member.
g.
The library wing was completed. The remaining contract price is paid.
h.
Payments of the second six months’ interest on bonds ($100,000) and the first bond serial ($200,000) were made.
i.
A donation made last year by a public accounting firm was expanded to acquire a specified collection of books on accounting, dating back
to the 16th and 17th centuries, at a cost of $85,000.
Required:
Prepare journal entries to record the events.
68. Consider the following events for Chase Private University:
a.
Unrestricted contributions are pledged in the amount of $500,000.
b.
Purchase of material and supplies totaling $100,000 of which $25,000 is not yet paid.
c.
Endowment income of $8,000 is restricted to student aid activities.
d.
A federal grant for $200,000 was awarded for research.
e.
Materials and supplies used were as follows: Student services $10,000, Auxiliary enterprise $25,000
f.
Federal government monies of $50,000 restricted for student loans are received.
g.
Expenses for the research project in d. totaled $100,000 to date.
h.
Term endowments expire, making $10,000 cash available.
i.
Cash of $10,000 from Life Income Fund Investments is received.
j.
Stock with a market value of $45,000 is received from an art patron to finance art gallery improvements. The donor’s cost basis is
$20,000.
k.
Federal grants for student awards through the Pell Grant program are received in the amount of $175,000.
l.
Bills went out for dormitory fees of which $250,000 is paid and $50,000 is still not received.
m.
Payment of $100,000 is made on the mortgage.
n.
Depreciation on all assets total $125,000. Of this depreciation charge, $25,000 represents depreciation on assets classified as donor
restricted. Chase Private University elects to release donor restrictions when assets are placed in service.
o.
Art gallery improvements of $25,000 were made with donor-restricted contributions.
Required:
Assuming that fund accounting is used, record the events. Identify the appropriate fund for each transaction.
69. The following selected transactions affected Barria University, a private not-for-profit institution, during the
fiscal year ended June 30, 20X3:
a.
Student tuition and fees billed for the year for $800,000, which was used for educational and general purposes. Prior experience shows
$10,000 will be uncollectible.
b.
The college received $300,000 in contributions. $100,000 was unrestricted; $50,000 was restricted for scholarships and $150,000 was
permanently restricted.
c.
Unrestricted income from endowment funds amounted to $18,000; restricted income was $10,000.
d.
Auxiliary enterprise included $75,000 from student residence halls; $20,000 from cafeterias; and $50,000 from the college store sales. All
amounts have been collected.
e.
Scholarships were awarded to students in the amount of $75,000. Of this amount, $40,000 related to donor-restricted gifts and restricted
income from endowments.
f.
Operating Expenses are paid as follows: Instruction $530,000; Research $15,000; Academic Support $120,000; Student Services $85,000;
Institutional Support $72,000; Operation and Maintenance of Plant; 43,000.
g.
The university received a research grant from the government in the amount of $85,000. During the year, the Chemistry Department spent
$48,000 related to this grant.
h.
Expenses from auxiliary enterprises amounted to $100,000
i.
Net Assets as June 30, 20X2 were as follows:
Unrestricted $143,000
Temporarily Restricted 64,000
Permanently Restricted 225,000
Required:
Prepare a Statement of Activities for Barria University for the year ended June 30, 20X3.
70. A not-for-profit hospital uses three revenue-controlling accounts: Patient Service Revenue, Other Operating
Revenue, and Nonoperating Revenue.
Required:
Indicate which of the three revenue accounts would be credited to record the following transactions, or None if
none of the accounts is appropriate.
a.
Snack bar sales
_______________________
b.
Dividends from unrestricted investments
_______________________
c.
Operating room fees
_______________________
d.
Pharmacy sales to patients
_______________________
e.
Fees for educational program
offered to nurses
_______________________
f.
Proceeds from bond sale
_______________________
g.
Gains on sale of unrestricted
investments
_______________________
h.
Contributions for a term endowment
_______________________
i.
Cash transfers from matured term
endowments for use in operations
_______________________
j.
Cafeteria sales to visitors
_______________________
a.
Other Operating Revenue, unrestricted
b.
Nonoperating Revenue, unrestricted
c.
Patient Services Revenue, unrestricted
d.
Other Operating Revenue, unrestricted
e.
Other Operating Revenue, unrestricted
f.
None
g.
Nonoperating Revenue, unrestricted
h.
Nonoperating Revenues, temporarily restricted
i.
None
j.
Other Operating Revenue, unrestricted
71. Consider the following unrestricted donations to a not-for-profit health care facility:
a.
Donation of property and equipment.
b.
Donation of substantial amount of medical supplies.
c.
Donation of resources to endow a fund.
d.
Donation of cash to be used to conduct cancer research.
e.
Volunteer provision of services by local high school students involving visiting and reading to patients.
Required:
Using the following format, indicate what entries would be recorded:
Event
Journal Entry
Event
Journal Entry
a.
Property and Equipment
Nonoperating Revenue—Temporarily Restricted Contributions
b.
Supplies Inventory (or Supplies Expense)
Operating Revenue, Unrestricted Contributions
c.
Cash (or other asset donated)
Nonoperating Revenue—Permanently Restricted Contributions
d.
Cash
Nonoperating Revenue—Temporarily Restricted Contributions
Not recorded because it is not a skilled service the organization would otherwise purchase
72. The following events are for Tubac Center, a not-for-profit hospital. The hospital records expense data
based on the nature of the expense, such as wages, salaries, and benefits.
a.
Patient services amounting to $300,000 were billed. A 5% allowance for uncollectible accounts is to be recorded, and an estimate of
$45,000 was made for contractual adjustments.
b.
Of $70,000 gross billings in part (a), third-party payers remitted $62,000 in full settlement. The remaining $8,000 is a contractual
adjustment.
c.
The board of trustees authorized $90,000 to increase the malpractice fund held by a trustee.
d.
Supplies costing $77,000 were requisitioned from inventory maintained on a perpetual basis. These supplies were used by professional
services.
e.
Nurses’ salaries of $110,000 were incurred. Of this amount, $8,000 of accrued benefits were unpaid. Ignore payroll deductions.
f.
$200,000 of the temporarily restricted net assets are reclassified to cover specified, current operations.
Required:
Prepare the necessary journal entries.