Question 1

An unrestricted balance sheet category used in health care reporting to show limitations on the use of assets due to bond covenant restrictions and governing board plans for future use is called:

Accepted Answer

The category used to show limitations on the use of assets due to bond covenant restrictions and governing board plans for future use is referred to as "Assets whose use are limited." Choices B, C, and D refer to different categories of net assets, but they do not specifically address limitations or restrictions on the use of assets.

Question 2

St. Martha's Hospital, a private not-for-profit, began the year 2009 with the following trial balance: $\begin{array}{|l|r|r|}
\hline& \underline { \text { Debits } } & \text { Credits } \
\hline \text { Cash } & 504,000 & \
\hline \text { Patient Accounts Receivable } & 620,000 & \
\hline \text { Allowance for Contractual Adjustments } & &144,000 \
\hline \text { Property, Plant, and Equipment - Net of } & 900,000 & \
 \text { Depreciation } &  \
\hline \text { Accounts Payable } & & 240,000 \
\hline \text { Unrestricted Net Assets } &&1,400,000\
\hline \text { Temporarily Restricted Net Assets } & & 240,000\
\hline& 2,024,000 & 2,024,000 \
\hline
\end{array}$ Transactions for 2009 are as follows:
(a) Collected $310,000 of the Patient Accounts Receivable that were outstanding at 12-31-08. Actual contractual adjustments on these receivables totaled $160,000.
(b) The Hospital billed patients $2,160,000 for services rendered. Of this amount, 5% is expected to be uncollectible. Contractual adjustments with insurance companies are expected to total $321,000. (Hint: use an allowance account to reduce accounts receivable for estimated contractual adjustments).
(c) In 2008 the Hospital had received a contribution of $240,000 to purchase new ultrasound equipment. The equipment was purchased for $200,000 in 2009.
(d) Charity care in the amount of $45,000 (at standard charges) was performed for indigent patients.
(e) The Hospital received $624,000 in securities to establish a permanent endowment. Income from the endowment is unrestricted.
(f) Other revenues collected in cash were: gift shop $11,000 and cafeteria $29,000.
(g) The Hospital received in cash unrestricted interest income on endowments of $6,000. Unrealized gains on endowment investments totaled $9,000.
(h) Expenses amounting to $1,120,000 for Professional Care of Patients, $310,000 for General Services and $190,000 for Administration were paid in cash.
(i) Depreciation on fixed assets, including the ultrasound equipment, totaled $114,000 for the year. ($90,000 for Professional Care of Patients, $18,000 for General Services and $6,000 for Administration.)
(j) Closing entries were prepared.
Required:
A. Record the transactions described above.
B. Prepare in good form, a Statement of Operations for the year ended December 31, 2009
C. Prepare in good form, a Statement of Changes in Net Assets for the year ended December 31, 2009.

Accepted Answer

The answer of St. Martha's Hospital, a private not-for-profit, began...

Question 3

Identify income items which should not be included in the determination of the performance indicator by a hospital

Accepted Answer

The answer of Identify income items which should not be...

Question 4

Identify the three types of restrictions placed on temporarily restricted net assets of a private sector not-for-profit health care organization and outline the accounting requirements for each type.

Accepted Answer

The answer of Identify the three types of restrictions placed...

Question 5

Investor owned health care organizations have the following equity section accounts:

Accepted Answer

The answer of Investor owned health care organizations have the...

Question 6

St. John's is a private not-for-profit hospital. At the end of December 2008, a donor pledged to make five payments of $50,000 each, on January 1, 2009, 2010, 2011, 2012 and 2013 to pay for operations in those years. The present value of these payments is $210,618, discounted at 6%. The contribution was not restricted as to purpose. Record all entries required for 2008 and 2009.

Accepted Answer

The answer of St. John's is a private not-for-profit hospital....

Question 7

Record the following transactions on the books of St. Thomas Hospital, a private not-for-profit hospital.
(a) The Hospital billed patients $150,000 for services rendered. Of this amount, 2.5% is expected to be uncollectible. Contractual adjustments with insurance companies are expected to total $29,000.
(b) The Hospital received $240,000 in pledges of support in a campaign undertaken to purchase new MMR equipment. All of the pledges are payable within one year and 8% are expected to be uncollectible.
(c) Charity care in the amount of $14,000 (at standard charges) was performed on an indigent patient.
(d) The Hospital collected $111,400 for the services performed in (1) above. Actual contractual adjustments for these services amounted to $31,600. The remaining receivables were written off as uncollectible.

Accepted Answer

The answer of Record the following transactions on the books...

Question 8

Assume you are reviewing the financial statements of a not-for-profit hospital. Where would you find the account "Assets whose is limited" and how is it used?

Accepted Answer

The answer of Assume you are reviewing the financial statements...

Question 9

What is the basis of accounting for hospitals and other health care organizations and what organizations are responsible for setting Level A GAAP?

Accepted Answer

The answer of What is the basis of accounting for...

Question 10

During the month of December, Godiva Hospital billed patients $45,000, billed 3^rd parties $70,000 and provided $10,000 of charity care. How much should Godiva report as Accounts Receivable?

Accepted Answer

Accounts Receivable includes the amounts billed to patients and third-party payers, but not charity care. Therefore, the total amount that should be reported as Accounts Receivable is $45,000 + $70,000 = $115,000.

Question 11

Answer the following questions:
(a) Other than a balance sheet, what are the remaining financial statements required of private not-for-profit health care entities?
(b) What accounts appear in the equity section of the balance sheet of commercial hospitals, government owned hospitals and private not-for-profit hospitals?

Accepted Answer

The answer of Answer the following questions:
(a) Other than a...

Quiz 12: Accounting for Hospitals and Other Health Care Providers