Author Question: The statement of owner's equity is prepared from information from the asset and liability accounts. ... (Read 63 times)

bb · **on:** Jul 5, 2018

The statement of owner's equity is prepared from information from the asset and liability accounts.
a. True
b. False
Indicate whether the statement is true or false

Question 2

(Journal entries for patient service revenues; computation of net patient service revenue)

Prepare journal entries to account for the following transactions for Cort Hospital.

Also, compute the net service revenue to be reported in the Hospital's statement of operations.
a. Cort provided services to patients during the year, billing a total of 59,500,000 at its established rates.
b. Included in the services provided in transaction a. were the following: (1) charity cases amounting to 2,100,000; and (2) adjustments amounting to 17,500,000 for differences between established billing rates and amounts allowed by third-party payers under prospective billing arrangements.
c. Cort collected 36,000,000 from direct-pay and third-party payers.
d. Cort established an allowance for bad debts in an amount equal to 10 of the accounts receivable outstanding after considering the effects of transactions a., b., and c., above.
e. The accounts of patients who owed 33,000 were written off as uncollectible.
f. At year-end, Cort analyzed the costs incurred under its arrangements with a third-party payer, and estimated that it would need to refund 250,000 to that third-party after submission and audit of its cost report to the third party.

braelync · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

False

Answer to Question 2

a. Patient accounts receivable 59,500,000
Patient service revenue 59,500,000

b. Provision for charity services 2,100,000
Provision for contractual adjustments 17,500,000
Patient accounts receivable 19,600,000

c. Cash 36,000,000
Patient accounts receivable 36,000,000

d. Bad debts expense 390,000
Allowance for uncollectible accounts 390,000

e. Allowance for uncollectible accounts 33,000
Patient accounts receivable 33,000

f. Provision for contractual adjustments 250,000
Estimated third-party payer settlements 250,000