7) Prepare a journal entry for each of the following transactions made by Happy

Question

7) Prepare a journal entry for each of the following transactions made by Happy Hospital. Please use the template below to record your entries.

A. `January 2. Purchased a 4 year liability insurance policy for $8,000..

B. January 15. The hospital mails a check to a supplier for $20,000 of the $30,000 it owed at the end of last year.

C. March 10. Purchased inventory on account for $15,000.

D. April 3. Cash of $14,000 is received from third-party payers for services provided to patients last year.

E. May 9. A patient for which $25,000 worth of inventory was consumed is discharged and the patient’s insurance company is billed $72,000.

F. December 31. An adjustment is made for one year’s liability insurance purchased in Item

Explanation / Answer

Journal Entries Account Title Dr $ Cr $ A Jan 2. Prepaid Insurance                  8,000 Cash               8,000 B Jan 15. Accounts Payable              20,000 Cash             20,000 C Mar 10. Inventory                15,000 Accounts Payable             15,000 D Apr 3. Accounts Receivable             14,000 Cash              14,000 E May 9. Inventory               25,000 Cost of Service Provided              25,000 ( materials consumed) Service Revenue             72,000 Accounts Receivable              72,000 ( billing for service) F Dec 31. Prepaid Insurance                 2,000 Insurance Expense                2,000 ( 1 years insurance expense expired)

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