Question: (Journal entries using funds and net asset classifications; preparation of financial statements) Christy General Hospital, a not-for-profit organization, accounts for its activities using a General Fund (GF), and three restricted fund groups-Specific Purpose Funds (SPF), Endowment Funds (EF), and Plant Replacement and Expansion Funds (PREF). The hospital had the following transactions during 2012. Prepare journal entries to record these transactions in the hospital's General Fund and restricted funds. Identify the fund and, where appropriate, the net asset classification. Also, prepare a statement of changes in net assets for the temporarily and permanently restricted net assets for 2012.
1. The hospital received a gift of $300,000 in equity securities from Brady Johnson. The terms of the gift specified that the principal amount of the gift and any investment gains must be maintained intact permanently. The gift terms also stipulated that the income from the investments could be spent only for cancer research.
2. Beynon Associates gave the hospital a cash gift of $50,000 and equity securities having a fair value of $150,000 at the date of the gift. The donor stipulated that the gift and all income derived from the gift (including proceeds from sale of the securities) could be used only for cancer research.
3. Diane Shaw promised to donate $50,000 to the hospital to provide equipment for the hospital's new gastroenterology unit, provided the hospital raised an equal amount of cash from other donors.
4. The hospital undertook a fund-raising campaign to purchase equipment for its new gastroenterology unit and raised cash of $80,000. Diane Shaw immediately sent the hospital a check for $50,000.
5. The hospital spent the entire $130,000 to buy equipment for its gastroenterology unit.
6. The hospital received interest and dividends totaling $20,000 on the gifts made by Brady Johnson and Beynon Associates.
7. The hospital sold some of the securities donated by Beynon so it could hire a well-known cancer researcher. It received $35,000 in cash from investments that had a fair value of $30,000 at the time of the gift. (The hospital's accounting polices call for recording in a single account both realized and unrealized gains and losses on securities held in restricted net assets.)
8. The hospital spent $70,000 on cancer research, using the resources provided by the Johnson and Beynon gifts.
9. At year-end, the fair values of the equity securities from the Johnson and Beynon gifts were as follows:
Johnson $310,000
Beynon $122,000
10. The hospital created the Christy General Hospital Foundation, over which it had full control. At year-end, the foundation notified the hospital that it had received $25,000 in cash donations, to be used only to purchase equipment for its gastroenterology unit.