Question

Q1. What is the purpose of a Journal and a Ledger? (1M)

Q2. The following are account balances (in thousands) of International Medical Service Center. Prepare a statement of operations for the year ended December 31, 2018 (4M)

Net property and equipment	SAR 2,000
Accounts receivable	SAR2,000
Medical claims payable	SAR45,000
Patient service revenue (net of contractuals)	SAR 950,000
Supply expense	SAR 255,000
Net assets released from restriction for operations	SAR 45, 000
Depreciation expense	SAR 35,000
Transfer to parent corporation	SAR 9,500
Labor expense	SAR300,000
Provision for bad debts	SAR12,000
Unrealized gains from available for sale securities	SAR150,000
Net Assets	SAR66,300
Cash & cash equivalents	SAR110,000
Long-term debt	SAR2,700

Answer 1

Answers as below:

A) After entries are posted to the journal, your accounting system transfers the information to the ledger, which then is used to produce your income statements and balance sheets. The ledger is referred to as the book of final entry.

Purpose of Journal - Journal entries provide information for all of a business's other financial reports. They're used by auditors to analyze how financial transactions impact a business.

Purpose of Ledger - The ledger provides a complete record of financial transactions over the life of the company. The ledger holds account information that is needed to prepare financial statements and includes accounts for assets, liabilities, owners' equity, revenues and expenses.

B) Please find below statement of operation:

	International Medical Service Center
	Income statement
	for the year ended December 31, 2018
Unrestricted Revenue				SAR
Patient service revenue (net of contractuals)				950000
Prov. For bad debt				-12000
Net patience service revenue				938000
Net assets released from restriction for operations				45000
Total revenue				983000
Operating Expenses
Labour exp.				300000
Supply Exp.				255000
Depreciation Exp.				35000
Total operating Exp.				590000
operating income				393000
Unrealized gains from available for sale securities				150000
Excess of Revenue over exp.				543000
Transfer to parent corporation				-9500