Use the information in chapter 9 this chapter chapter

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might have. Use the information in chapter 9, this chapter (chapter 11) and in the FASB Accounting Standards Codification to help you answer the requirements of the problem. The accounting principles applicable to not-for-profit organizations in general also apply to not-for-profit health care facilities. Sundown Acres, a not-for-profit assisted living center engaged in the following transactions during the year.
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Required: Prepare appropriate journal entries. Indicate whether the funds are unrestricted, temporarily restricted, or permanently restricted. Transaction that occurred during the year: 1. Sundown Acres billed residents for $6,200,000. Of this amount it estimates that $3,000,000 will be paid by third-party providers at a rate of only 80%. The balance of $3,200,000 was billed directly to residents. It estimates that 2% of the amount billed directly to residents will be uncollectible. Accounts Receivable 6,200,000 Bad Debt Expense 64,000 Allowance for contractual discounts 600,000 Allowance for bad debts 64,000 Resident services revenues 5,600,000 Unrestricted 2. Sundown Acres collected $5,100,000. Cash 5,100,000 Accounts Receivable 5,100,000 Unrestricted 3. Sundown Acres received a cash contribution of $100,000 to be used exclusively for residents’ educational and cultural programs. Of this amount, it spent $80,000 on qualified activities during the year. Cash 80,000 Contribution Revenue 80,000 Educational and Cultural expense 80,000 Cash 80,000 Cash 100,000 Contribution Revenue 100,000 Permanently Restricted 4. Sundown Acres earned interest and dividends of $40,000 (cash) on its endowment fund. Income from the endowment is unrestricted. Cash 40,000 Endowment 40,000 Unrestricted 5. The market value of the endowment’s investments increased by $10,000. Income from the endowment is unrestricted. 6. Sundown Acres recognized $250,000 of depreciation on its building and $80,000 on equipment.
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7. Sundown Acres incurred other operating expenses of $5,300,000; $5,000,000 of this amount was paid in cash. 8. At year end Sundown Acres received a pledge of $6,000,000 toward the center’s new building campaign. Sundown Acres will receive this pledge in three equal amounts of $2,000,000 at the end of each of the following three years. The center uses a discount rate of 8% to value noncurrent pledges.
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