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A not for not profit hospital spent 40,000 on medical equipment. This amount was received as...

A not for not profit hospital spent 40,000 on medical equipment. This amount was received as restricted gift for this purpose. Please prepare entry

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Answer #1

Journal Entries are as follows :

1. When money for restricted asset is received -

Cash A/c (Temp. Restricted) ________________Dr. $ 40,000

To Contribution Revenue - Temp. Restricted _____ Cr. $ 40,000

[Being Cash gift received for Medical Equipment purchase - temporarily restricted]

2. When money is used for purchase of asset -

(a) Net Asset Released from Restrction A/c ________Dr. $ 40,000

To Cash A/c (Temp Restricted) _________________Cr. $ 40,000

[Being Cash (Temp Restricted),  released from restriction]

(b) Medical Equipment A/c ______________Dr. $ 40,000

To Net Asset Released from Restriction A/c _____Cr. $ 40,000

[Being Medical Equipment purchased ]

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