Question

On March 31, Hopi Hospital had assets of $500,000, liabilities of $300,000, and net assets of $200,000. During April, the following transactions were completed:

1. Services rendered to patients, $100,000

2. Collections on patients’ accounts, $85,000

3. Supplies purchased on account, $20,000

4. Payments on accounts payable to suppliers, $16,000

6. Supplies consumed in patient care services, $18,000

7. Other expenses paid in cash, $54,000

8. Purchased equipment for cash, $12,000

Required: What were the amounts of Hopi Hospital’s (1) assets, (2) liabilities, and (3) net assets at April 30?

Answer 1

Answer to the question:

Calculation of Assets liability and Net Assets of Hopi Hospital

Particulars	Effect	Assets	Liabilities	Net Assets (Asset – Liabilities)
Opening Balance		$500,000	$300,000	$200,000
Service rendered to patient	Receivable increases	$100,000	-
Collection from patient	Receivable decreases and cash increase Hence no effect on assets	-	-
Supplies purchase on account	Inventory and creditor increase	$20000	$20000
Payment to suppliers	Cash Decrease and creditor also decrease	($16000)	($16000)
Supplies consumed	Inventory Decreases	($18000)	-
Expenses paid in cash	Cash decreases	($54000)	-
Purchase equipment for cash	Cash Decrease fixed asset increase, No overall impact on assets	-	-
Total		$532000	$304000	$228000

Hence closing value of Assets = $532,000
Liabilities = $304,000
  Net Assets = $228,000