Jordan an auditor, is performing a routine review of a not-for-profit hospital and noted the following account balances in the statement of operations for the fiscal year ending
Sept.30, 2011: $$\begin{array}{l}
\begin{array} {lll }
\text {Gross patient serv ice rev enue from all }&\$4,450,000\
\text {services at the hospital's estab lished billing rate}&\
\text {Bad debt expense}&\$90,000\
\text {Contractual adjustments}&\$420,000\
\end{array}
\end{array}$$
Calculate the amount the hospital would report as net patient service revenue in its statement of operations for the fiscal year ending Sept.30, 2011.

Question

Jordan an auditor, is performing a routine review of a not-for-profit hospital and noted the following account balances in the statement of operations for the fiscal year ending
Sept.30, 2011: $$\begin{array}{l}
\begin{array} {lll } 
 \text {Gross patient serv ice rev enue from all }&\$4,450,000\
 \text {services at the hospital's estab lished billing rate}&\
 \text {Bad debt expense}&\$90,000\
 \text {Contractual adjustments}&\$420,000\
\end{array}
\end{array}$$
Calculate the amount the hospital would report as net patient service revenue in its statement of operations for the fiscal year ending Sept.30, 2011.

Quizplus · Accepted Answer

Net patient service revenue is calculated by subtracting bad debt expense and contractual adjustments from gross patient service revenue. Therefore, the hospital would report net patient service revenue of $4,450,000 - $90,000 - $420,000 = $4,080,000.

Jordan an Auditor, Is Performing a Routine Review of a Not-For-Profit