St. Joseph’s Hospital began operations in December 2016 and had patient service

Question

St. Joseph’s Hospital began operations in December 2016 and had patient service revenues totaling $1,010,000 (based on customary rates) for the month. Of this, $125,000 is billed to patients, representing their insurance deductibles and co-payments. The balance is billed to third-party payers, including insurance companies and government health care agencies. St. Joseph estimates that 20 percent of these third-party payer charges will be deducted by contractual adjustment. The Hospital’s fiscal year ends on December 31. Required: 1. Prepare the journal entries for December 2016. Assume that 15 percent of the amounts billed to patients will be uncollectible. 2. Prepare the journal entries for 2017 assuming the following: $106,000 is collected from the patients during the year and $10,200 is written off. Actual contractual adjustments total $201,000. The remaining receivable from third-party payers is collected.

Explanation / Answer

1 Journal Entry for Year 2016 Dr. Cr. Particulars Accounts & Notes Receivable 1010000              Revenues – Patient Service Charges 1010000 ( Gross billing for services) Revenue Deductions – Contractual Adjustments 177000 (1010000-125000)*20% Revenue Deductions – Provision (125000 * 15%) 18750 for Uncollectible Accounts            Allowance for Uncollectible Recievables 195750             & third-Party Contractuals ( To provide for adjustments) 2 Journal Entry for Year 2017 Dr. Cr Cash 106000           Accounts & Notes Receivable 106000 ( Cash collected from patients accounted for) Allowance for Uncollectible recievables 187200 & Third-Party Contractuals ( 10200+177000)           Accounts & Notes Receivable 187200 ( To account for write offs) Cash         (1010000-125000)-201000 684000           Accounts & Notes Receivable 684000 ( Cash collected from third party accounted for) Revenue Deductions – Contractual Adjustments 24000              Accounts & Notes Receivable (201000-177000) 24000 ( To provide for additional contractual sdjustment)

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.