Question

In: Accounting

Developing Financial Statements All organizations, including those in the healthcare industry, need to make money to...

Developing Financial Statements

All organizations, including those in the healthcare industry, need to make money to be profitable and survive. Financial statements, such as balance sheets, profit and loss statements, and cash flow statements, summarize an organization’s profitability and overall financial status. For this Assignment, you practice developing three key financial statements using data from the Sharpe Medical Center.

Sharpe Medical Center

Sharpe Medical Center is a large Midwestern acute care and ambulatory facility serving an urban city population.

Givens (in '000s):

Inventory

$4,000

Patient revenues (net of contractual allowance)

$302,000

Gross plant, property, and equipment

$375,000

Net accounts receivable

$85,000

Ending balance, temporarily restricted net assets

$6,000

Wages payable

$6,600

Long-term debt

$218,400

Supply expense

$34,000

Net assets released from temporary restriction

$7,000

Depreciation expense

$44,000

General expense

$95,000

Provision for bad debt expense

$4,500

Cash and cash equivalents

$18,000

Transfer to parent corporation

($3,900)

Beginning balance, unrestricted net assets

$239,400

Accounts payable

$11,000

Beginning balance, temporarily restricted net assets

$13,000

Interest expense

$6,000

Labor expense

$123,000

Accumulated depreciation

$22,000

Long-term investments

$20,000

Ending balance, unrestricted net assets

$238,000

To prepare for this Assignment:

Examine the data from Sharpe Medical Center. Reflect on how you will use this data to develop a Balance Sheet, Profit and Loss Statement, and Cash Flow Statement. Refer to the course text for additional guidance.

The Assignment:

Complete a Balance Sheet, Profit and Loss Statement (Statement of Operations), and Cash Flow Statement (Statement of Changes in Net Assets) using the Week 5 Financial Statement Excel Template located in the Learning Resources.

Solutions

Expert Solution

1

Sharp Medical Center

Profit and Loss Statement (in '000s)

For the Year Ended

Revenues

Patient revenues (net of contractual allowance)

$                                   302,000.00

Less; Expenses

Supply expense

$34,000

Depreciation expense

$44,000

General expense

$95,000

Interest expense

$6,000

Labor expense

$123,000

Total expense

$302,000

Net income

$                                                    -

___________________________

2

Sharp Medical Center

Balance Sheet (in '000s)

For the Year Ended

Current assets

Cash and cash equivalents

$               18,000.00

Net accounts receivable

$               85,000.00

Inventory

$                 4,000.00

Total current assets

$            107,000.00

Gross plant, property, and equipment

$            375,000.00

(less accumulated depreciation)

$               22,000.00

Net plant, property & equipment

$            353,000.00

Long-term investments

$               20,000.00

Total assets

$            480,000.00

Current liabilities

Accounts payable

$11,000

Wages payable

$                 6,600.00

Total current liabilities

$               17,600.00

Long-term debt

$            218,400.00

Total liabilities

$            236,000.00

Net assets

Ending balance, unrestricted net assets

$            238,000.00

Ending balance, temporarily restricted net assets

$                 6,000.00

Total net assets

$            244,000.00

Total liabilities and net assets

$            480,000.00

_______________________________________________

3

Sharp Medical Center

Cash flow Statement (in '000s)

For the Year Ended

Cash flow from operating activities

Net income

$                                              -

Adjustments;

Depreciation expense

$44,000

Transfer to parent corporation

($3,900)

Provision for bad debt expense

$4,500

Net cash flows from operating

$44,600

Cash flow from investing activities

Net change temporarily restricted net assets

$                                 7,000.00

Net change unrestricted net assets

$                                    400.00

Net cash flows from investing activities

$                                 7,400.00

Cash flow from financing activities

Long-term investments

($20,000)

Net cash flows from financing activities

($20,000)

Net cash flows from

$32,000.00

Add;

Cash and cash equivalents

$                  18,000.00

Total cash

$50,000.00


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