Assignment task: The following transactions and events relate to the operation of a government hospital.
A. Develop journal entries to record the effects of these transactions and events in the general ledger accounts of the hospital. Explanations of entries may be omitted.
- Total billings for patient services rendered, $85,000; it was estimated that bad debt losses on these billings would be $1,000 and that contractual adjustments would amount to $6,000.
- Expenses of $15,000 were incurred for heart research. Restricted assets that were received in prior years were used to finance this research.
- Equipment (cost, $8,000; accumulated depreciation, $5,000) was sold for $1,000.
- Depreciation expense on buildings was recognized, $18,000.
- Earnings on endowment investments are restricted to use for intern education; $14,000 was earned in the current year.
- Unrestricted income on endowment investments, $3,500, was received.
- Of the billings for patient services rendered (see item 1), $1,000 was written off.
B. Explain how each of the preceding transactions affects the Statement of Revenues, Expenses, and Changes in Net Position.