Quiz 04:

Name: _______________________ ID No.: _______Score: _______ Rating: _______

Problem 01:
Remote Reconstructive is a private, not-for-profit hospital. The following information is available about the operations.
1. Gross patient services charges totaled $4,500,000.
2. Included in the above revenues are: charity services, $165,000; contractual adjustments, $400,000; and courtesy allowances, $14,000.
3. Received marketable securities valued at $115,000 for the purchase of new diagnostic equipment.
4. The marketable securities were sold for $124,000 and diagnostic equipment was purchased at a cost of $138,000.
5. Revenue from the hospital gift shop was $31,000 and from the cafeteria revenues were $160,000.
6. Incurred and paid nursing service costs of $1,000,000 and general service costs of $500,000.
Required:
Make journal entries for the aforementioned transactions. (8 pts)

Problem 02:
The Rehabilitation Clinic is a private, not-for-profit organization that provides free rehabilitation health services for the uninsured. The
following transactions occurred for the Rehabilitation Clinic.
1. Unrestricted cash gifts that were received last year, but designated for use in the current year, totaled $40,000.
2. Unrestricted pledges of $400,000 were received. Two percent of the pledges typically prove uncollectible. Additional cash contributions
during the year totaled $200,000.
3. Gifts in kind were received that were sold at a silent auction for $16,000. The fair value of the donated gifts in kind could not be
reasonably determined.
4. Expenses were incurred as follows: Salary of doctor, $110,000; facility rental for the clinic program, $60,000; purchases of supplies,
$10,000; and utility costs, $12,000.
5. Marketable securities with a fair value of $520,000 were received
with a stipulation that the clinic use the funds to purchase a suitable property for the clinic.
Required:
Make journal entries for the aforementioned transactions. (5 pts)

Problem 03:
Entity A receives the following donations at the beginning of the year:
• Cash of P2M to be used at the discretion of Entity A’s management.
• Cash of P3M restricted for the acquisition of equipment.
• Investment in equity securities of P5M which Entity A shall never use; only the income therefrom.
On July 1 of the current year, Entity A acquires an equipment for P3M. The equipment was put to use on October 1 of the current year and
has a 10 years useful life with P100,000 residual value. The entity receives cash dividends of P200,000 from the investment that has a fair
value of 5,100,000 at the end of the period.
1. Provide the journal entries.
2. Compute for the ending balances of unrestricted, temporarily restricted and permanently restricted net assets.

Problem 04:
A not-for-profit organization provides the following information for the year:

Required:
Prepare the journal entries for these transactions. (2 pts)

Problem 05:
1. Voluntary health and welfare organizations must report expenses classified by
A. Restriction. C. restriction and natural classification.
B. function and natural classification. D. restriction, function and natural classification.

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2. Which one of the following statements is not required for voluntary health and welfare organizations?
A. A statement of financial position. C. A statement of functional expenses.
B. A statement of activities. D. A statement of changes in net assets.

3. Voluntary health and welfare organizations classify fund-raising costs as

A. costs of services sold. C. functional expenses.
B. program services. D. supporting services.

4. Voluntary health and welfare organizations

A. may report fund accounts as supplementary according to FASB Statement No. 117 specifications.
B. are required to report unrestricted and restricted net assets according to fund accounting principles.
C. must report fund accounts if management uses them for internal reporting.
D. are restricted from reporting fund accounting.

5. A law firm develops the service contracts for a voluntary health and welfare organization. How will this action be recorded by the
voluntary health and welfare organization?
A. As a restricted revenue. C. As both an unrestricted revenue and as an expense.
B. As an unrestricted contribution. D. As a pro bono activity.

6. Hospital premium fees are

A. charity care services.
B. only earned to the extent of the services provided.
C. refundable to the subscriber if services are unused.
D. revenues earned even if the standard charge is above or below the fee.

7. Hospital courtesy allowances are

A. charity care services.
B. revenue deductions.
C. Expenses.
D. revenues earned even if the standard charge is above or below the allowance.

8. Activities treated as deductions from gross revenues (contra- revenue accounts) in not-for-profit hospitals and other health care
organizations include(s)
A. charity care services. C. estimated bad debts.
B. courtesy allowances. D. all of the above.

9. Which one of the following financial statements is not required by SFAS 117 for a voluntary health and welfare organization?
A. Statement of Financial Position.
B. Statement of Functional Expense.
C. Statement of Activities and Changes in Net Assets.
D. Statement of Cash Flows.
E. Statement of Operations.

10. On a statement of functional expenses for a voluntary health and welfare organization, how are expenses classified?
A. health services expenses and operating expenses.
B. program services expenses and administrative services expenses.
C. program services expenses and supporting services expenses.
D. operating expenses and supporting services expenses.
E. operating expenses and administrative expenses.

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