Q.2 Whitt Valley Hospital is a not-for-profit initial care facility. Prepare a S
ID: 2595361 • Letter: Q
Question
Q.2 Whitt Valley Hospital is a not-for-profit initial care facility. Prepare a Statement of Operations for Whitt Hospital using the following information for its calendar year ending December 31, 2016:
Third-parties 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, including year-end adjustments of $1,600,000
The hospital estimated uncollectible amounts from direct-pay patients to be $250,000
The hospital received capitation premiums of $2,500,000. It estimated that the cost of providing this care was $1,800,000
The hospital reported salaries and wages of $4,500,000 for the year
The fair value of investments held by the hospital increased by $25,000
The hospital reported interest and dividend income of $100,000
The hospital used $375,000 of temporarily restricted resources to purchase capital assets, consistent with the restrictions imposed by the donor
The hospital reported depreciation expense of $475,000
The hospital used supplies inventories of 365,000
The hospital incurred other operating expenses of $275,000
Explanation / Answer
Whitt Valley Hospital Statement of Operations Year ended Dec 31, 2016 Operating Revenues Net Patient Service Revenue ($6,500,000 - $950,000 (Charity Care) - $160,000 (Contractual Adjustments)) 3,950,000.00 Premium Revenues 2,500,000.00 Total Operating Revenues 6,450,000.00 Operating Expenses Salaries & Wages 4,500,000.00 Supplies 365,000.00 Other Operating Expenses 275,000.00 Provision for Bad Debts 250,000.00 Depreciation 475,000.00 Total Operating Expenses 5,865,000.00 Operating Gain 585,000.00 Investment Income 100,000.00 Excess of Revenues over Expenses 685,000.00 Change in Net Unrealized Gain and Losses for Investments 25,000.00 Net Assets released from restrictions for Capital Expenditures 375,000.00 Increase in Unrestricted Net Assets 1,085,000.00
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