Question
Question 1 Whitt Valley Presbyterian Hospital is a nonprofit initial care facility. For the hospitals calendar year ending December 31, 2019, prepare a Statement of
Question 1
Whitt Valley Presbyterian Hospital is a nonprofit initial care facility. For the hospitals calendar year ending December 31, 2019, prepare a Statement of Changes in Net Assets for the hospital.
- Third-parties payers and direct-pay patients were billed $6,500,000 at the hospital's established billing rates
- The hospital determined that certain of its patients qualified for charity care and that it would not seek to collect $950,000 at established billing rates from direct-pay patients
- The hospital estimated contractual adjustments for the year of $1,600,000
- The hospital originally estimated uncollectible amounts from direct-pay patients to be $250,000 (recall that original estimated uncollectible amounts reduce revenue; only estimates specific to an individual patient are reported as bad debt expense).
- The hospital received capitation premiums of $2,500,000. It estimated that the cost of providing this care was $1,800,000
- The hospital received payments from third-party payers and direct-pay patients totaling $3,500,000
- The hospital received contributions of $1,100,000 that were restricted by donors for building a new urgent care wing
- The hospital paid salaries and wages of $4,500,000 in cash; these amounts are reported as patient care expense
- The fair value of investments required to be held in perpetuity increased by $25,000
- The hospital received cash from interest and dividend income of $10,000 on investments without donor restrictions
- The hospital used $1,375,000 of net assets with donor restrictions to construct a new urgent care wing, consistent with the restrictions created by the donors
- The hospital reported depreciation expense of $475,000
- The hospital used drug inventories of $365,000
- The hospital incurred other operating costs for patient care of $275,000 on credit
- The hospitals beginning of the year trial balance at January 1, 2019 was as follows:
Whitt Valley Presbyterian Hospital Trial Balance As of January 1, 2019
| Without Donor Restrictions | With Donor Restrictions | ||
Debit | Credit | Debit | Credit | |
Cash | $1,485,000 |
| $401,600 |
|
Investments | 153,000 |
| 40,000 |
|
Patient accounts receivable | 250,000 |
|
|
|
Inventorydrugs | 401,000 |
|
|
|
Property, plant, and equipment | 4,400,000 |
|
|
|
Accumulated depreciation |
| $600,000 |
|
|
Accounts payable |
| 21,000 |
|
|
Net assets, January 1, 2019 | - | 6,068,000 | - | $441,600 |
| $6,689,000 | $6,689,000 | $441,600 | $441,600 |
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