Question

During 2017, the following selected events and transactions were recorded by Milos County Hospital.

1.	Gross charges for hospital services, all charged to accounts and notes receivable, were as follows:

Patient service revenues

$1,666,500

2.	The hospital cafeteria and gift shop had cash sales of $296,100.
3.	Additional information determined subsequently to recording patient service revenues and relating to the current-year is as follows:

Contractual adjustments	$	640,000
Provision for bad debts		31,000
Charity care		262,200

4.	A federal cost reimbursement research grant of $358,000 was awarded. As of the end of the year, $280,000 in expenses related to the grant had been made.
5.	Vouchers totaling $1,344,940 were issued for the following items:

Fiscal and administrative services expenses	$	198,440
General services expenses		253,900
Nursing services expenses		593,000
Other professional services expenses		186,400
Inventory		105,200
Expenses accrued at December 31, 2017		8,000

6.	Collections of accounts receivable totaled $1,167,000. Accounts written off as uncollectible amounted to $12,700.
7.	Cash payments on vouchers payable (paid to employers and suppliers) during the year were $1,035,200.
8.	Supplies of $100,570 were issued to nursing services.
9.	On December 31, 2017, accrued interest income on investments was $1,600.
10.	Depreciation of buildings and equipment was as follows:

Buildings	$	59,000
Equipment		81,000

11.	On December 31, 2017, closing entries were made in the general journal.

Required

a-1.	Prepare journal entries for each of the transactions in accordance with the standards for a governmental health care entity that follows proprietary fund accounting. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

• 1 Record the amount receivable towards patient services rendered.

• 2 The hospital cafeteria and gift shop had cash sales of $296,100.

• 3 Record the contractual adjustment, charity care and provision for bad debts.

• 4 Record the payment for expenses related to research.

• 5 Record the reimbursement of research expenses from the grants and contributions account.

• 6 Record the expenses vouchers for the year.

• 7 Collections of accounts receivable totaled $1,167,000. Accounts written off as uncollectible amounted to $12,700.

• 8 Cash payments on vouchers payable (paid to employers and suppliers) during the year were $1,035,200.

• 9 Supplies of $100,570 were issued to nursing services.

• 10 On December 31, 2017, accrued interest income on investments was $1,600.

• 11 Record the depreciation expenses for the year.

a-2.	Prepare closing entries in accordance with the standards for a governmental health care entity that follows proprietary fund accounting. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

- Record the closing entries for the year.

b.	Calculate the net patient service revenue that would be reported on the statement of revenues, expenses, and changes in net position.

Net Patient Service Revenue would be: Patient Service Revenue Adjusted for Charity Care Less: Contractual Adjustments Net Patient Service Revenue

Answer 1

Milos County Hospital Requirement a.1. Journal Enteries Trans. Particulars 1 Accounts and Notes Receivable a/c To Patient Service Revenue Dr. Debit in $ Credit in $ 1666500 1666500 2 296100 Cash a/c To Revenues - Other 296100 3 Contractual Adjustments a/c Dr. Provision for Bad Debts a/c Dr. Patient Service Revenue a/c Dr. To Accounts and Notes Receivable To Allowance for Uncollectible Accounts 640000 31000 262200 902200 31000 4.a. Dr. 280000 Research Expenses a/c To Cash 280000 4.b. 280000 Cash a/c Dr. To Revenues - Grants and Contributions 280000 5 Fiscal and Administrative Service Expenses a/c Dr. General Service Expenses a/c Nursing Service Expenses a/c Other Professional Service Expenses a/c Inventory a/c Accrued Expenses Payable a/c To Vouchers Payable 198440 253900 593000 186400 105200 8000 1344940 Dr. Cash a/c Allowance for Uncollectible Accounts a/c To Accounts and Notes Receivable 1167000 12700 Dr. 1179700 7 Dr. 1035200 Vouchers Payable a/c To Cash 1035200 8 100570 Nursing Service Expenses a/c To Inventory 100570 9 Dr. 1600 Accrued Interest Receivable a/c To Investment Income 1600 10 Dr. 140000 Depreciation Expense a/c To Accumulated Depre-Build. To Accumulated Depre-Equip. 59000 81000

Requirement a.2. Closing Enteries Trans. Particulars 11 Patient Service Revenue a/c Dr. Investment Income a/c Revenues - Grants and Contributiions a/c Dr. Revenues - Other a/c Dr. Net Position - Unrestricted a/c Dr. To Contractual adjustments To Provision for Bad debts To Research Expenses To Fiscal and Administrative Service Expenses To General Service Expenses To Nursing Service Expenses To Other Professional Service Expenses To Dpreciation Expenses Debit in $ Credit in $ 1404300 1600 280000 296100 441310 640000 31000 280000 198440 253900 693570 186400 140000 Requirement b Net Patient Service Revenue would be: Patient Service Revenue Adjusted for Charity Care Less:Contractual Adjustments Net Patient Service Revenue 1404300 -640000 764300