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Revenues and expenses of hospitals are recorded in the accounts of the

a. Endowment Fund.
b. General Fund.
c. Plant Replacement Fund.
d. Specific Purpose Fund.

7. Under Newman Hospital’s established rate structure, the hospital would have earned patient service revenue of
$7,000,000 for the year ended December 31, 2017. However, Newman did not expect to collect this amount because
of charity allowances of $1,000,000 and discounts of $500,000 to third party payers. In May 2017, Newman
purchased bandages from Ace Supply Co. at a cost of $5,000. However, Ace notified Newman that the invoice was
being cancelled and that the bandages were being donated to Newman. For the year ended December 31, 2017,
how much should Newman record as patient service revenue?

8. The following funds were among those on Cole University's books at April 30, 2017:
Funds to be used for acquisition of additional properties
for university purposes (unexpended at 4/30/17) $2,500,000
Funds set aside for debt service charges and for
the retirement of indebtedness on university properties 5,000,000
How much of the above-mentioned funds should be included in plant funds?

9. Cindy Duncan is a social worker on the staff of National Service Center, a voluntary welfare organization. She
earns $42,000 annually for a normal workload of 2,000 hours. During 2017 she contributed an additional 800 hours of
her time to National at no extra charge. How much should National record in 2017 as contributed service expense?

10. Bell Foundation, a voluntary health and welfare organization, supported by contributions from the general public,
included the following costs in its statement of functional expenses for the year ended December 31, 2017.
Fund raising $1,000,000
Administrative 600,000
Research 200,000
Bell’s functional expenses for 2017 program services included __________________.

21. In accounting for private, not-for-profit organizations, revenues and expenses are reported at _________
amounts and most gains and losses are reported at ___________ amounts.
a. net, gross
b. gross, net
c. gross, gross
d. net, net

22. The following information is available about the operations for a private, not-for-profit university.

1. The university sold $9,000,000 of 8% bonds to finance the construction of a new building for the business
school. The bonds were sold on January 1 and pay interest on December 31 of each year. The bonds were
sold at par and mature in 20 years.
2. The university received $2,500,000 in alumni donations for the new business school building.
3. The building was constructed at a total cost of $10,500,000 and the contractor was paid in full.
4. Interest was paid on the bonds.
5. Depreciation on the new building was $525,000.

Prepare the appropriate journal entries for the university.

23. A voluntary health and welfare organization received $200,000 of pledges from donors on February 15, 2017.
The donors did not place either time or use restrictions on the amount pledged. The governing board estimated that
10 percent of the pledges would be uncollectible. During the remainder of fiscal 2017, cash received from pledges
amounted to $184,000. For the year ended June 30, 2017, what amount should the voluntary health and welfare
organization report as Contributions-Unrestricted?

a. $0
b. $200,000
c. $184,000
d. $180,000

24. An NNO obtained cash for the acquisition of property and equipment as follows: Loan proceeds $200,000
Contributions $400,000 These funds are used to acquire land. In addition, $20,000 in principal and $2,000 in interest
is paid on indebtedness relating to property and equipment. Depreciation on property and equipment for the year is

Required: Prepare all necessary entries in the affected funds of the NNO, assuming that the NNO is a Voluntary
health and welfare organization.

25. The following information was taken from the accounts and records of the NSP Foundation, a private, not for-
profit organization. All balances are as of June 30, 2017, unless otherwise noted.

Unrestricted Support – Contributions $250,000

Unrestricted Revenues – Investment Income 28,000
Temporarily Restricted Gain on Sale of Investments 13,000
Expenses – Scholarships 300,000
Expenses – Fund Raising 60,000
Expenses – Management and General 120,000
Restricted Support – Contributions 420,000
Restricted Revenues – Investment Income 30,000
Permanently Restricted Support – Contributions 50,000
Unrestricted Net Assets, July 1, 2016 250,000
Temporarily Restricted Net Assets, July 1, 2016 40,000
Permanently Restricted Net Assets, July 1, 2016 10,000

The unrestricted support from contributions was received in cash during the year. The expenses included $500,000
payable from donor-restricted resources.

Prepare NSP’s statement of activities for the fiscal year ended June 30, 2017.

26. Voluntary health and welfare organizations must report expenses classified by
a. restriction
b. function and natural classification
c. restriction and natural classification
d. restriction, function and natural classification

27. On October 10, 2016, a national voluntary health help foundation was the recipient of a telethon sponsored by a
renowned celebrity. Phone donations totaling $8,500,000 were promised. Based on historical information, 15% of
these pledges are expected to be uncollectible. Of these pledges,
$7,100,000 were collected in 2017; the remainder were considered uncollectible.

Identify the proper fund and prepare the journal entries necessary in 2016 and 2017.

28. The following events affected the Burlington University Loan Fund:
1. $300,000 is received from a donor to establish a student loan fund. Loans will carry a 6% annual interest rate.
2. The Loan Fund loaned the $300,000 to students. Five percent of the loans are estimated to be uncollectible.
3. Loans of $50,000 were repaid with $3,000 of interest.
4. A $1,000 student loan was written off as uncollectible.

Prepare the journal entries necessary to record these transactions.

29. Christy Hospital received money from a donor to set up an endowment fund. The following information pertains to
this contribution:

1. $3,000,000 was received to establish the fund. The requirements were
a. $150,000 of the endowment fund’s income must be used for research grants each year.
b. The remainder of income is under the discretion of the governing board.
c. The principal is expendable after the donor’s death. It shall be used to purchase equipment.
2. The cash received was invested in a number of securities.

3. Dividends of $150,000 and interest of $400,000 were received.
4. The income was transferred to the appropriate funds.
5. Of the restricted income, only $100,000 was expended for its specified purpose during 2016.
6. The governing board specified that $300,000 of the income would be used for loans for deserving medical
7. $250,000 was lent to medical students.
8. The donor died of cancer

30. Food for the Golden Years is a private, not-for-profit organization that provides free meals for the post-65 age
group in the suburbs of a large city. Record the following transactions in the accounts of Food for the Golden Years.
The following transactions affected the accounts of Food for the Golden Years.

1. Unrestricted cash gifts that were received last year, but designated for use in the current year, totaled $20,000.
2. Unrestricted pledges of $40,000 were received. Five percent of the pledges typically prove uncollectible. Additional
cash contributions during the year totaled $25,000.
3. Donations of food totaled $100,000. The inventory of food on hand decreased by $1,500 during the year.
4. The following expenses were incurred: Salary of director, $15,000; facility rental for the meals program, $2,500;
and purchases of food, $45,000.
5. Pledges of $250,000 were received during the year. The pledges were restricted for use in purchasing new
delivery vans. All of these pledges are expected to be collected in the next fiscal year.

Make journal entries for the aforementioned transactions.