Question

Florida Hospital Apopka, a not-for profit organization, began 2018 with the following account balances on January 1: Cash Accounts receivable Allowance for doubtful accounts Supplies inventory Property and Equipment Accumulated depreciation Accounts payable Notes payable (short-term bank loans) Net assets $70,000 245,000 18,000 24,000 1,500,000 300,000 21,000 500,000 1,000,000 During 2018, the accounting clerk recorded the following transactions (Florida Hospital Apopka's year end is December 31): Transaction Number Event Amount Billed patients for services rendered $1,700,000 12,000 712,000 683,000 150,000 250,000 1,124,000 44,000 2.Purchased medical supplies on credit Emplovee salaries earned during 2018 3. Received a bank loan (short-term) Cash collections on patient billings Estimated bad debts for 2018 billings 8. 10

Answer 1

A)	a) INCOME STATEMENT
	Service revenue
	Operating expenses		$ 1,700,000.00
	Salaries expense	$      712,000.00
	Supplies expense	$        10,000.00
	Depreciation expense-PPE	$      150,000.00
	Bad debts	$        44,000.00	$      916,000.00
	Net income	$      784,000.00
	BALANCE SHEET
	Current Assets
	Cash (70000-683000+750000+1124000-575000)	$      686,000.00
	Accounts receivables (245000+1700000-1124000)	$      821,000.00
	Allowance for doubtful accounts (18000+44000)	$      (62,000.00)
	Medical supplies (24000+12000-10000)	$        26,000.00	$ 1,471,000.00
	Non-Current Assets
	Property and equipment	$ 1,500,000.00
	Accumulated depreciation (300000+150000)	$      450,000.00
			$ 1,050,000.00
	Total assets		$ 2,521,000.00
	Current liabilities
	Accounts payable (21000+12000)	$        33,000.00
	Salaries payable (712000-683000)	$        29,000.00
	Notes payable (500000+750000-575000)	$      675,000.00	$      737,000.00
	Equity (1000000+784000)		$ 1,784,000.00
	Total liabilities & Equity		$ 2,521,000.00
b) Net working capital = Current Asset - Current Liabilities
	= $14,71,000-$7,37,000 = $7,34,000
c) Debt ratio = Current Liability/Total liabilities
	$737000/$2521000 = 29.23%
d) Debt ratio of sunnyvale = 100747/154815 = 65.08%
The debt ratio is very high in Sunnyvale as compared to Florida As we are concerned with Florida The debt ratio will indicate the leverage of company, higher the debt ratio the more leveraged the company will be , which indicates more financial risk. For Florida the financial risk is very low as compared with Sunnyvale.