Question

St. Martha’s Hospital, a private not-for-profit, began the year 2012 with the following trial balance:

           

	Debits	Credits
Cash	604,000
Patient Accounts Receivable	620,000
Allowance for Contractual Adjustments		144,000
Property, Plant, and Equipment – Net of Depreciation	800,000
Accounts Payable		340,000
Unrestricted Net Assets		1,300,000
Temporarily Restricted Net Assets		240,000
	2,024,000	2,024,000

           

Required:

Record the transactions described for 2012. If no entry is required, indicate No Entry.

25 points

           

(a)    Collected $340,000 of the Patient Accounts Receivable that was outstanding at 12-31-08. Actual contractual adjustments on these receivables totaled $150,000.

(b)   The Hospital billed patients $2,350,000 for services rendered. Of this amount, 4% is expected to be uncollectible. Contractual adjustments with insurance companies are expected to total $321,000. (Hint: use an allowance account to reduce accounts receivable for estimated contractual adjustments).

(c)    In 2011 the Hospital had received a contribution of $240,000 to purchase new ultrasound equipment. The equipment was purchased for $200,000 in 2012.

(d)   Charity care in the amount of $60,000 (at standard charges) was performed for indigent patients.

(e)    The Hospital received $674,000 in securities to establish a permanent endowment. Income from the endowment is unrestricted.

Prepare a Trial Balance after the above entries.

Answer 1