St$.$ Steven's Hospital is a private not$-$for$-$profit entity providing health care

services to citizens of a small rural community.

During the current month, the hospital engaged in the following transactions.

Your responsibility, as the Senior Accountant, is to book the appropriate journal

entries for St$.$ Steven's for the current month for patient service revenues along

with any required adjustments based on the circumstances listed below in parts

a$)$ through e$)$ as well as the entries based on the information contained in parts f$)$

and g$).$

a$.$ Based on the hospital's established billing rate, services rendered to patients

during the month amounted to $$3\mathrm{.}2$ million. $$275,000$ of the $$3\mathrm{.}2$ million

amount was provided to indigents and will be considered charity care.

b$.$ $$2,500,000$ in patient services rendered will be billed to Alpha Medical Group;

a third$-$party payor. Alpha Medical Group pays for services rendered to its

customers based on a rate schedule for the types of procedures provided.

Alpha will reimburse the hospital $$2,275,000$ for the services provided during

the current month to its customers. Part of the agreement between St $.$

Steven's and Alpha Medical is that St$.$ Steven's will not bill Alpha's customers

for the difference between the amounts that the hospital bills and the amount

that Alpha pays the hospital.

c$.$ $$175,000$ in patient services rendered will be billed to uninsured patients

which the hospital believes may be collectible. However, based on prior

experience with uninsured patients, the Hospital estimates that $$75,000$ of the,

$$175,000$ will still be uncollectible.

d$.$ $$250,000$ in patient services rendered was for services provided for hospital

employees. The hospital provides a $50$ percent discount for services provided

to its employees.

e$.$ How will the hospital recognize the $$275,000$ identified in part a$)$ as the value

of charity services provided?

f$.$ The hospital is the defendant in a malpractice suit. Attorneys for the hospital

are reasonably sure the hospital will be found liable. Their best estimate of the

amount of loss is $$1,250,000.$ The hospital carries medical malpractice

insurance with a $$500,000$ deductible clause.

g$.$ The hospital has numerous capital assets on its books. Straight$-$line

depreciation on these assets totals $$125,000$ for the current period.