1. Under Lennon Hospital’s rate structure, it earned patient service revenue of
ID: 2560012 • Letter: 1
Question
1. Under Lennon Hospital’s rate structure, it earned patient service revenue of $8.2 million for the year ended December 31, 2017. However, Lennon did not expect to collect this entire amount because it deemed $1.00 million to be charity care and estimated contractual adjustments to be $720,000.
During 2017, Lennon purchased medical supplies from Harrison Medical Supply Company at a cost of $3,200. Harrison notified Lennon that it was donating the supplies to the hospital.
Lennon is a private not-for-profit entity:
a. How much should Lennon record as patient service revenue? (Enter your answer in millions rounded to 2 decimal places.)
b. How much should Lennon record as net patient service revenue? (Enter your answer in millions rounded to 2 decimal places.)
c. How should Lennon record the donation of the supplies? (Enter your answer in dollars not in millions.)
a.
Patient service revenue
?
Million
b.
Net patient service revenue
?
Million
c.
Donation of the supplies
?
a.
Patient service revenue
?
Million
b.
Net patient service revenue
?
Million
c.
Donation of the supplies
?
Explanation / Answer
Explanation a. Patient service revenue $ 7.20 Million Charity care is not included. b. Net patient service revenue $ 6.48 Million Netting of contractual adjustment is done of $ 720k c. Donation of the supplies $3,200.00 The supplies are recorded at their $3,200 value with an increase in unrestricted net assets. As the supplies are used, the $4,000 asset will be reclassified as an expense.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.