Which entry would be the correct entry to record that a hospital has provided patient services for $200,000, of which 25% will be billed to a third party?

Question

Quizplus · Accepted Answer

Option B correctly records the revenue earned by the hospital for providing patient services as $150,000 (75% of $200,000). The remaining 25% ($50,000) is the amount that will be billed to a third party, which is recorded as a separate Accounts Receivable. Option A is incorrect as it only records the total amount of patient services provided, but does not separate the amount earned by the hospital and the amount billed to the third party. Option C is incorrect as it records the full $200,000 as revenue earned by the hospital, which is not accurate. Option D is incorrect as it records the full $200,000 as Accounts Receivable, which does not reflect the fact that only 25% of the amount will be billed to a third party. Option E is incorrect as it records the full $200,000 as revenue earned by the hospital and does not separate the amount billed to the third party.

Which Entry Would Be the Correct Entry to Record That