The following events were recorded on the books of Mercy Hospital for the year

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The following events were recorded on the books of Mercy Hospital for the year ended December
31, 2008.

1. Revenue from patient services totaled $16,000,000. The allowance for uncollectibles was
established at $3,400,000. Of the $16,000,000 revenue, $6,000,000 was recognized under
cost reimbursement agreements. This revenue is subject to audit and retroactive
adjustment by third-party payers (estimated adjustments are included in the allowance
account).

2. Patient service revenue is accounted for at established rates on the accrual basis.
3. Other operating revenue totaled $346,000, of which $160,000 was from specific purpose
funds.

4. Mercy received $410,000 in unrestricted gifts and bequests. They are recorded at fair market
value when received.

5. Endowment funds earned $160,000 in unrestricted income.

6. Board designated funds earned $82,000 in income.

7. Mercy’s operating expenses for the year amounted to $13,370,000. This included
$500,000 in straight-line depreciation.

Required:

Prepare a statement of activities for Mercy Hospital for the year ended December 31, 2008.