Prepare iournal entries to account for the following transactions for Cort Hospi
ID: 2589064 • Letter: P
Question
Prepare iournal entries to account for the following transactions for Cort Hospital. 28. Also, compute the net service revenue to be reported in the Hospital's statement of operations. a. Cort provided services to patients during the year, billing a total of $59,500,000 at its established rates. b. Included in the services provided in transaction a. were the following: (1) charity cases amounting to $2,100,000; and (2) adjustments amounting to $17,500,000 for differences between established billing rates and amounts allowed by third-party payers under prospective billing arrangements. c. Cort collected $36,000,000 from direct-pay and third-party payers d. Cort established an allowance for bad debts in an amount equal to 10% of the accounts receivable outstanding after considering the effects of transactions a., b., and c., above. e. The accounts of patients who owed $33,000 were written off as uncollectible. f. At year-end, Cort analyzed the costs incurred under its arrangements with a third-party payer, and estimated that it would need to refund $250,000 to that third-party after submission and audit of its cost report to the third party.Explanation / Answer
No. Accounts Titles & Explanations Debit Credit a Patient accounts receivable 59500000 patient service revenue 59500000 b Provision for charity services 2100000 Provision for adjustments 17500000 Patient accounts receivable 19600000 c Cash 36000000 Patient accounts receivable 36000000 d Bad debts expense 390000 Allowance for uncollectible accounts 390000 (59500000 - 19600000 - 36000000 = 3900000 * 10%) e Allowance for uncollectible accounts 33000 Patient accounts receivable 33000 f Provision for adjustments 250000 Estimated third party payer settlement 250000 *Calculation of Net Service Revenue: Gross Service Revenue 59500000 Less: Provision for charity services -2100000 Provision for adjustments -17500000 Estimated third party payer settlement -250000 NET SERVICE REVENUE 39650000