Lucas Community Hospital is a nonprofit hospital. Prepare journal entries to record the following transactions and events:
a. Third-parties and direct-pay patients were billed $4,200,000 at the hospital's established billing rates.
b. The billings in transaction a. included the following:
(1) Services provided to charity care patients totaled $170,000
(2) Services were provided to patients covered by third-party payers with whom contractual adjustments had been negotiated. The difference between the hospital's established rates and the contractual rates was $1,000,000.
c. The hospital collected $2,200,000 from its billings for patient services.
d. The hospital received $800,000 in fees under capitation arrangements with HMOs.
e. Salaries paid in cash during the period were as follows:
$$\begin{array} { l r }
\text { Professional care of patients } & 800,000 \
\text { Dietary services } & 45,000 \
\text { General and administrative services } & 55,000
\end{array}$$ f. The hospital used $100,000 of its idle cash to purchase equity securities
g. During the period, the hospital received the following contributions:
(1) Richard & Pryor, a local pharmaceutical manufacturer, donated $40,000 of drugs to the hospital. The hospital placed the drugs in its inventory.
(2) Several high students voluntarily carried food to hospital patients during weekends. If the hospital had to pay for these services, it would have cost the hospital $5,000.
h. In providing care to its patients, the hospital used drugs amounting to $25,000.
i. The hospital received parking lot fees in the amount of $20,000.
j. Before preparing its annual financial statements, the hospital considered the following:
(1) The hospital estimated that $90,000 of its billings to individual direct pay patients would not be collected
(2) The hospital recorded depreciation expenses of $100,000.
(3) The fair value of the securities purchased in f., above, was $98,000.
(4) A hospital patient filed a malpractice claim against the hospital for $50,000, claiming the hospital food made him sick. Hospital attorneys believe the claim was without merit and that the hospital would prevail if the claim went to trial.

Question

Lucas Community Hospital is a nonprofit hospital. Prepare journal entries to record the following transactions and events:
a. Third-parties and direct-pay patients were billed $4,200,000 at the hospital's established billing rates.
b. The billings in transaction a. included the following:
(1) Services provided to charity care patients totaled $170,000
(2) Services were provided to patients covered by third-party payers with whom contractual adjustments had been negotiated. The difference between the hospital's established rates and the contractual rates was $1,000,000.
c. The hospital collected $2,200,000 from its billings for patient services.
d. The hospital received $800,000 in fees under capitation arrangements with HMOs.
e. Salaries paid in cash during the period were as follows:
 $$\begin{array} { l r } 
\text { Professional care of patients } & 800,000 \
\text { Dietary services } & 45,000 \
\text { General and administrative services } & 55,000
\end{array}$$ f. The hospital used $100,000 of its idle cash to purchase equity securities
g. During the period, the hospital received the following contributions:
(1) Richard & Pryor, a local pharmaceutical manufacturer, donated $40,000 of drugs to the hospital. The hospital placed the drugs in its inventory.
(2) Several high students voluntarily carried food to hospital patients during weekends. If the hospital had to pay for these services, it would have cost the hospital $5,000.
h. In providing care to its patients, the hospital used drugs amounting to $25,000.
i. The hospital received parking lot fees in the amount of $20,000.
j. Before preparing its annual financial statements, the hospital considered the following:
(1) The hospital estimated that $90,000 of its billings to individual direct pay patients would not be collected
(2) The hospital recorded depreciation expenses of $100,000.
(3) The fair value of the securities purchased in f., above, was $98,000.
(4) A hospital patient filed a malpractice claim against the hospital for $50,000, claiming the hospital food made him sick. Hospital attorneys believe the claim was without merit and that the hospital would prevail if the claim went to trial.

Quizplus · Accepted Answer

The Answer of Lucas Community Hospital is a nonprofit hospital. Prepare journal entries to record the following transactions and events:
a. Third-parties and direct-pay patients were billed $4,200,000 at the hospital's established billing rates.
b. The billings in transaction a. included the following:
(1) Services provided to charity care patients totaled $170,000
(2) Services were provided to patients covered by third-party payers with whom contractual adjustments had been negotiated. The difference between the hospital's established rates and the contractual rates was $1,000,000.
c. The hospital collected $2,200,000 from its billings for patient services.
d. The hospital received $800,000 in fees under capitation arrangements with HMOs.
e. Salaries paid in cash during the period were as follows:
 $$\begin{array} { l r } 
\text { Professional care of patients } & 800,000 \
\text { Dietary services } & 45,000 \
\text { General and administrative services } & 55,000
\end{array}$$ f. The hospital used $100,000 of its idle cash to purchase equity securities
g. During the period, the hospital received the following contributions:
(1) Richard & Pryor, a local pharmaceutical manufacturer, donated $40,000 of drugs to the hospital. The hospital placed the drugs in its inventory.
(2) Several high students voluntarily carried food to hospital patients during weekends. If the hospital had to pay for these services, it would have cost the hospital $5,000.
h. In providing care to its patients, the hospital used drugs amounting to $25,000.
i. The hospital received parking lot fees in the amount of $20,000.
j. Before preparing its annual financial statements, the hospital considered the following:
(1) The hospital estimated that $90,000 of its billings to individual direct pay patients would not be collected
(2) The hospital recorded depreciation expenses of $100,000.
(3) The fair value of the securities purchased in f., above, was $98,000.
(4) A hospital patient filed a malpractice claim against the hospital for $50,000, claiming the hospital food made him sick. Hospital attorneys believe the claim was without merit and that the hospital would prevail if the claim went to trial.

Lucas Community Hospital Is a Nonprofit Hospital F the Hospital Used $100,000 of Its Idle Cash to to Record