List and record each transaction for the Claymont Outpatient Clinic, under the a

Question

• List and record each transaction for the Claymont Outpatient Clinic, under the accrual basis of accounting, at December 31, 20X1. Then develop a balance sheet as of December 31, 20X1, and a statement of operations for the year ended December 31, 20X1.
  • The clinic received a $10,000,000 unrestricted cash contribution from the community. (Hint: this transaction increases the unrestricted net assets account.)
  • The clinic purchased $4,500,000 of equipment. The clinic paid cash for the equipment.
  • The clinic borrowed $2,000,000 from the bank on a long-term basis.
  • The clinic purchased $550,000 of supplies on credit.
  • The clinic provided $8,400,000 of services on credit.
  • In the provision of these services, the clinic used $420,000 of supplies.
  • The clinic received $800,000 in advance to care for capitated patients.
  • The clinic incurred $4,500,000 in labor expenses and paid cash for them.
  • The clinic incurred $2,230,000 in general expenses and paid cash for them.
  • The clinic received $6,000,000 from patients and their third parties in payment of outstanding accounts.
  • The clinic met $440,000 of its obligation to capitated patients (transaction "The clinic received $800,000 in advance to care for capitated patients.").
  • The clinic made a $400,000 cash payment on the long-term loan.
  • The clinic also made a cash interest payment of $40,000.
  • A donor made a temporarily restricted donation of $370,000, which is set aside in temporary investments.
  • The clinic recognized $400,000 in depreciation for the year.
  • The clinic estimated that $850,000 of patient accounts would not be received, and established a provision for bad debt.
• Statement of operations. The following is a list of account balances for Krakower Healthcare Services, Inc. on December 31, 20X1. Prepare a statement of operations as of December 31, 20X1. (Hint: when net assets are released from restriction, the restricted account is decreased, and the unrestricted account is increased. It is recognized under revenues, gains, and other support.) Givens Supply expense $60,000 Transfer to parent corporation $18,000 Provision for bad debt expense $10,000 Depreciation expense $35,000 Labor expense $80,000 Interest expense $7,000 Administrative expense $50,000 Net patient service revenues $220,000 Net assets released from restriction $30,000
• Statement of cash flows. The following is a list of account balances for Hover Hospital on June 30, 20X1. Prepare a statement of cash flows as of June 30, 20X1. Givens Transfer to parent corporation $40,000 Proceeds from sale of fixed equipment $2,290,000 Principal payment on bonds payable $780,000 Purchase of fixed equipment $5,300,000 Beginning of cash balance $6,500,000 Cash from operating activities $3,900,000 Principal payment on notes payable $6,500

Givens Supply expense $60,000 Transfer to parent corporation $18,000 Provision for bad debt expense $10,000 Depreciation expense $35,000 Labor expense $80,000 Interest expense $7,000 Administrative expense $50,000 Net patient service revenues $220,000 Net assets released from restriction $30,000

Explanation / Answer

Answer

a. Cash   $10M

         Unrestricted Net Assets   $10M

b. Equipt $4.5M

         Cash $4.5M

c. Cash $2M

         Long-Term Notes $2M

d. Supplies $550K

         Accts/Pay $550K

e. Accts/Rec $8.4M

         Services Revenue $8.4M

f. Supplies Expense $420K

         Supplies $420K

g. Cash $800K

         Unearned Revenue $800K

h. Labor Expenses $4.5M

         Cash $4.5M

i. General Expense $2.23M

         Cash $2.23M

j. Cash $6M

         Accts/Rec $6M

k. Unearned Revenue $440K

        Capitation Revenue $440K

l. Long-Term Notes $400K

        Cash $400K

m. Interest Expense $40K

        Cash $40K

n. Cash $370K

         Temporary Restricted Net Assets $370K

o. Depreciation Expense $400K

         Accum/Depr $400K

p. Bad Debt Expense $850K

         Provision for Bad Debt $850K

Stmt of Operations

Balance Sheet

Revenues Capitation Rev     440,000 Service Rev 8,400,000 8,840,000 Expenses Bad Debt Exp     850,000 Labor Exp 4,500,000 Depr Exp     400,000 General Exp 2,230,000 Interest Exp       40,000 Supplies Exp     420,000 8,440,000 Net Income     400,000

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