Chapter 16 – Accounting for Health Care Organizations
16–16
Ch. 16, Solutions, 16-20 (Cont’d)
MILOS COUNTY HOSPITAL
GENERAL JOURNAL
Debits Credits
4. RESEARCH EXPENSES 200,000
CASH 200,000
Debits Credits
5. FISCAL AND ADMINISTRATIVE SERVICE
EXPENSES 194,440
6. CASH 1,159,000
7. VOUCHERS PAYABLE 1,031,200
CASH 1,031,200
Chapter 16 – Accounting for Health Care Organizations
16–17
Ch. 16, Solutions, 16-20 (Cont’d)
MILOS COUNTY HOSPITAL
GENERAL JOURNAL
Debits Credits
10. DEPRECIATION EXPENSE 124,000
11. Closing Entries:
PATIENT SERVICE REVENUES 1,403,500
INVESTMENT INCOME 800
REVENUE—GRANTS & CONTRIBUTIONS 200,000
*NOTE: Although it was not discussed in the chapter (see chapter 7), it would be
necessary to adjust Net Position—Unrestricted, Net Position—
Chapter 16 – Accounting for Health Care Organizations
16–18
Ch. 16, Solutions, 16-20 (Cont’d)
b. Net patient service revenue would be:
Patient service revenue adjusted for charity care
General Problem Information: Governmental hospital—journalize
Learning Objective: 16-4
Topic: Reporting and Accounting Issues
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge Application AICPA: BB: Measurement
Level of Difficulty: Hard
Chapter 16 – Accounting for Health Care Organizations
16–19
Ch. 16, Solutions (Cont’d)
16-21.
a. CHRISTINA REHABILITATION HOSPITAL
STATEMENT OF OPERATIONS
FOR YEAR ENDED SEPTEMBER 30, 2017
(000s omitted)
UNRESTRICTED REVENUE, GAINS AND OTHER SUPPORT:
NET PATIENT SERVICE REVENUE (note 1) $512,380
OTHER OPERATING REVENUE 11,330
INVESTMENT INCOME 7,300
TOTAL REVENUE AND GAINS 531,010
Chapter 16 – Accounting for Health Care Organizations
16–20
Ch. 16, Solutions, 16-21 (Cont’d)
CHRISTINA REHABILITATION HOSPITAL
STATEMENT OF CHANGES IN NET ASSETS
FOR YEAR ENDED SEPTEMBER 30, 2017
(000s omitted)
UNRESTRICTED NET ASSETS (see part 1 above):
EXCESS OF REVENUES AND GAINS OVER EXPENSES
AND LOSSES $ 4,490
UNREALIZED LOSS ON INVESTMENTS (950)
NET ASSETS RELEASED FROM RESTRICTIONS 1,010
INCREASE IN UNRESTRICTED NET ASSETS 4,550
TEMPORARILY RESTRICTED NET ASSETS:
Chapter 16 – Accounting for Health Care Organizations
16–21
Ch. 16, Solutions, 16-21 (Cont’d)
b. CHRISTINA REHABILITATION HOSPITAL
BALANCE SHEET
AS OF SEPTEMBER 30, 2017
(000s omitted)
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 45,525
ACCOUNTS RECEIVABLE (NET OF ALLOWANCE FOR
UNCOLLECTIBLES OF $16,550) 45,300
INVENTORY 8,410
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $ 20,730
ACCRUED PAYABLES 26,790
NET ASSETS:
UNRESTRICTED 225,655
Chapter 16 – Accounting for Health Care Organizations
16–22
Ch. 16, Solutions, 16-21 (Cont’d)
General Problem Information: Not-for-profit hospital—financial statements
Learning Objective: 16-4
Topic: Reporting and Accounting Issues
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge Application AICPA: BB: Reporting
Level of Difficulty: Hard
16-22. a.
EDWARDS LAKE COMMUNITY HOSPITAL
GENERAL JOURNAL ENTRIES
FISCAL YEAR 2017
Debits Credits
1. ACCOUNTS AND NOTES RECEIVABLE 2,979,650
2. CASH 2,960,600
3. ADMINISTRATION EXPENSES 446,480
GENERAL SERVICES EXPENSES 524,360
NURSING SERVICES EXPENSES 1,031,800
Chapter 16 – Accounting for Health Care Organizations
16–23
Ch. 16, Solutions, 16-22 (Cont’d)
EDWARDS LAKE COMMUNITY HOSPITAL
Debits Credits
4. NURSING SERVICES EXPENSES 140,000
GENERAL SERVICES EXPENSES 140,000
5. ASSETS LIMITED AS TO USE—INTEREST
6. ADMINISTRATION EXPENSES 49,100
GENERAL SERVICES EXPENSES 49,100
7(b). INVENTORY 2,100
ADMINISTRATION EXPENSES 700
Calculations:
73,100 – 71,000 = 2,100
Chapter 16 – Accounting for Health Care Organizations
16–24
Ch. 16, Solutions, 16-22 (Cont’d)
EDWARDS LAKE COMMUNITY HOSPITAL
Debits Credits
7(c). MORTGAGE PAYABLE 500,000
CURRENT PORTION OF MORTGAGE PAYABLE 500,000
9. Closing Entry:
PATIENT SERVICES REVENUE 3,500,900
OTHER OPERATING REVENUES 998,750
INVESTMENT INCOME⎯UNRESTRICTED 8,530
NET ASSETS, UNRESTRICTED, UNDESIGNATED 7,867
NET ASSETS, UNRESTRICTED, DESIGNATED
FOR PLANT 7,867
Ch. 16, Solutions, 16-22 (Cont’d)
Chapter 16 – Accounting for Health Care Organizations
16–25
b. EDWARDS LAKE COMMUNITY HOSPITAL
BALANCE SHEET
AS OF DECEMBER 31, 2017
ASSETS
CURRENT ASSETS:
CASH $ 323,600
ACCOUNTS AND NOTES RECEIVABLE (NET OF
UNCOLLECTIBLE ACCOUNTS OF $15,800) 45,550
INVENTORY 75,200
TOTAL CURRENT ASSETS 444,350
ASSETS LIMITED AS TO USE:
PROPERTY, PLANT, AND EQUIPMENT:
LAND 208,000
BUILDINGS (NET OF ACCUMULATED DEPRECIATION
OF $ 1,740,000) 2,776,000
EQUIPMENT (NET OF ACCUMULATED DEPRECIATION
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $ 73,400
ACCRUED PAYROLL 219,890
Chapter 16 – Accounting for Health Care Organizations
16–26
Ch. 16, Solutions, 16-22 (Cont’d)
NET ASSETS:
c. EDWARDS LAKE COMMUNITY HOSPITAL
STATEMENT OF OPERATIONS
FOR YEAR ENDED DECEMBER 31, 2017
EXPENSES:
ADMINISTRATION EXPENSES $ 496,280
GENERAL SERVICES EXPENSES 713,160
Chapter 16 – Accounting for Health Care Organizations
16–27
Ch. 16, Solutions, 16-22 (Cont’d)
c. EDWARDS LAKE COMMUNITY HOSPITAL
STATEMENT OF CHANGES IN NET ASSETS
FOR YEAR ENDED DECEMBER 31, 2017
UNRESTRICTED NET ASSETS (see part 1 above):
EXCESS OF REVENUES AND GAINS OVER EXPENSES $ 119,390
UNREALIZED LOSS ON INVESTMENTS (663)
NET ASSETS RELEASED FROM RESTRICTIONS 94,000
Chapter 16 – Accounting for Health Care Organizations
16–28
Ch. 16, Solutions, 16-22 (Cont’d)
d. EDWARDS LAKE COMMUNITY HOSPITAL
STATEMENT OF CASH FLOWS
FOR YEAR ENDED DECEMBER 31, 2017
CASH FLOW FROM OPERATING ACTIVITIES:
CHANGE IN NET ASSETS $118,727
ADJUSTMENTS TO RECONCILE CHANGE IN NET ASSETS TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
INCREASE IN ACCOUNTS RECEIVABLE (NET) (19,050)
INCREASE IN INTEREST RECEIVABLE (1,180)
General Problem Information: NFP hospital—journalize and financial statements
Learning Objective: 16-4
Topic: Reporting and Accounting Issues
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge Application AICPA: BB: Measurement
Level of Difficulty: Hard
Chapter 16 – Accounting for Health Care Organizations
16–29
Ch. 16, Solutions (Cont’d)
16-23.
The following is a list of modifications or corrections Danker Community Hospital
should make for its statement of operations to comply with FASB standards.
• Charity care is never recorded; therefore, it would not be recognized as an
adjustment to revenue
shown below a calculation for excess revenue, gains and other revenue over
expenses.
• Contractual adjustments is a contra-revenue account and should be deducted
from patient service revenue.
General Problem Information: Not-for-profit statement of operations error analysis
Learning Objective: 16-4
Topic: Reporting and Accounting Issues
Bloom’s Taxonomy: Analyze
Accreditation Skills tag: AACSB: Analytical Thinking AICPA: BB: Reporting
Level of Difficulty: Hard