Boston Hospital had the following account balances on January 1, 2018:

Boston Hospital

Cash

$2,360,000

Accounts Receivable

$5,000,000

Prepaid

$2,100,000

Inventory

$6,000,000

Equipment

$24,000,000

Accumulated Depreciation

$(14,400,000)

Investments in Stocks

$105,000,000

Endowments

$86,000,000

Accounts Payable

$6,500,000

Interest Payable

$-

Deferred Revenue

$3,000,000

Long Term Debt

Permanently Restricted Net Assets

$50,000,000

Temporarily Restricted Net Assets

$36,000,000

Problem #1: Prepare the Balance Sheet at January 1, 2018 base on the trial balance above.Based on the entries below, prepare the balance sheet at December 31, 2018

Problem 2: Record the adjusting journal entries in proper form for the following transactions

1.Boston Hospital provided services to patients of $4,000,000 throughout the year on account.Per agreement with the insurance company, 27% of revenue was not expected to be collected. At December 31, 2018, it was estimated that patients who were expected to pay $50,000 of the receivable were not going to pay.

2.The equipment that Boston Hospital owned had a useful life of 10 years with no salvage value, record the adjusting entry at December 31, 2018.

3.Included in the prepaid balance of $2,100,000 is a prepayment of 1,500,000 for 3 years of rent paid on January 1, 2018.At December 31, 2018, what is the adjusting entry?

4.Patients paid $1,750,000 in cash for services rendered in transaction #1

1. Boston Hospital has 250,000 shares of stock in New London Corporation.OnJune 30, 2018, New London Corporation declared a cash dividend of $0.50/share.OnDecember 28, 2018, New London Corporation paid $0.25/share, stating that the other $0.25/share would be paid at a later date.

6.On July 1, 2018, Boston Hospital issued $25,000,000 of 3.5% 20 year bonds at 93.5% of face value.The bonds pay interest semi-annually on January 1 and July 1.Boston Hospital paid (in cash) $17,000 in cost of issuance.What are the entries at July 1, 2018

7.What are the entries at 12/31/2018 for the bond issuance in #6 (hint, there are 3).

8.Boston Hospital used 1,000,000 of the supplies inventory

Problem 3:Prepare the Income Statement for the transactions above

Problem 4:Prepare the Cash Flow for the Transactions above (hint use balance sheet for beginning and ending cash)

Problem 5:Using the Balance Sheet from Problem one and prior years income statement (below).Calculate the following: Operating Profit Margin ratio, operating expense ratio, rate on return of net assets and total assets, Net asset ratio.Based on the outcome of the ratios, provide some perspective on the financial state of the hospital in comparison to prior year.

Boston Hospital Income Statement

December 31, 2017

Gross Patient Service Revenue

5,200,000

Contractual Adjustments

(1,404,000)

Bad Debt

(30,000)

Net Patient Service Revenue

3,766,000

Total Revenue

3,766,000

Rent Expense

375,000

Interest Expense

-

Supplies Expense

950,000

Depreciation Expense

2,400,000

Total Expense

3,725,000

Income from Operations

41,000

Interest Income

400,000

Net Income

441,000