Transactions plus multiple statements. Happy Valley Hospital, Inc., had the following ending balances (in thousands) for its assets, liabilities, and net assets as of December 31, 20X0.
Givens
Cash $2,900
Accounts receivable $44,000
Allowance for uncollectibles $6,000
Inventory or supplies $3,000
Prepaid insurance $700
Long-term investments $93,000
Plant, property, and equipment $155,000
Accumulated depreciation $80,000
Short-term accounts payable $8,500
Accrued expenses $19,000
Long-term debt $49,000
Unrestricted net assets $127, 200
Temporarily restricted net assets $7,900
Permanently restricted net assets $1,000
List and record each 20X1 transaction under the accrual basis of accounting. Then develop a balance sheet for end-of-years 20X0 and 20X1 and a statement of operations and a statement of changes in net assets for the year ended December 31, 20X1.
a. The hospital made a cash payment of $3,100,000 toward outstanding accounts payable.
b. The hospital received $5,200,000 in cash from a donor who temporarily restricted its use. (Hint: this transaction increases the temporarily restricted net assets account.)
c. The hospital provided $123,000,000 of services on credit.
d. The hospital consumed $2,630,000 of supplies in the provision of its ambulatory services.
e. The hospital paid cash for incurred interest expense of $3,800,000.
f. The hospital collected $114,000,000 in cash from outstanding accounts receivable.
g. The hospital incurred $4,000,000 in general expenses that it paid for in cash.
h. The hospital made a $3,800,000 cash principal payment toward its long-term debt.
i. The hospital collected $25,000,000 in cash from outstanding accounts receivable.
j. The hospital purchased $30,000,000 of supplies on credit.
k. The hospital earned, but did not receive, $2,000,000 in income from its restricted net assets. The income can be used for general operations. (Hint: this transaction increases interest receivable and is also recorded under revenues, gains, and other support.)
l. The hospital incurred $1,300,000 in interest expense, but not yet paid for in cash.
m. The hospital incurred $60,000,000 in labor expenses, which it paid for in cash.
n. The hospital made a cash payment of $2,300,000 in advance for insurance expense.
o. The hospital transferred $1,200,000 in cash to its parent corporation.
p. The hospital incurred $8,000,000 in depreciation expense.
q. The hospital’s prepaid insurance of $2,500,000 expired for the year.
r. The hospital estimated $700,000 in bad debt and established a provision for bad debt expense for the year.