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Week 2: Connection to the Real World (Balance Sheet and Income Statement) Complete Assignment Exercise 11-2 Components of a Balance Sheet and Income Statement on pages 542–545.

Week 2: Connection to the Real World (Balance Sheet and Income Statement)

Complete Assignment Exercise 11-2 Components of a Balance Sheet and Income Statement on pages 542–545.

Submit your assignment.

Assignment Exercise 11–2: Components of Balance Sheet and Income Statement
Refer to the Metropolis Health System (MHS) balance sheet and statement of revenue and expense in the MHS Case Study appearing in Chapter 33. Patient accounts receivable of $7,400,000 is shown as net of $1,300,000 allowance for bad debts (8,700,000 2 1,300,000 5 7,400,000). (1) What percentage of gross accounts receivable is the allowance for bad debts? (2) If the allowance for bad debts is raised to $1,500,000, where does the extra $200,000 go?

Rubric

Week 2 Homework Assignment

Week
2 Homework Assignment

Criteria

Ratings

Pts

This criterion is linked to a
Learning Outcome
Student has provided
complete and thorough responses to Exercise 11-2, Part 1. Show the allowance
for bad debt.

10 pts

Full Marks

0 pts

No Marks

10 pts

This criterion is linked to a
Learning Outcome
Student has provided
complete and thorough responses to Exercise 11-2, Part 2. Show the allowance
for bad debt and where does the extra funds go.

10 pts

Full Marks

0 pts

No Marks

10 pts

This criterion is linked to a
Learning Outcome
Student has provided
complete and thorough responses to Exercise 11-2

Quality work will be
free of any spelling, punctuation, or grammatical errors. Sentences and
paragraphs will be clear, concise, and factually correct.

10 pts

Full Marks

0 pts

No Marks

10 pts

Assignment Exercise 11–1: Components of Balance Sheet and Statement of Net Income

Refer to the Metropolis Health System (MHS) financial statements contained in Appendix 33-A. Use the MHS comparative balance sheet, statement of revenue and expenses, and statement of fund balance for this assignment.

 

Required

Identify the following MHS balance sheet components. List the name of each component and its amount(s) from the appropriate MHS financial statement.

 

Current Liabilities

 

Total Assets

 

Income from Operations

 

Accumulated Depreciation

 

Total Operating Revenue

 

Current Portion of Long-Term Debt

 

Interest Income

 

Inventories

 

Doctors Smith and Brown: Statement of Net Income for the Three Months Ended March 31, 2___

Revenue                            

Net patient service revenue         180,000              

Other revenue   -0-         

Total Operating Revenue                             180,000

Expenses                           

Nursing/PA salaries         16,650  

Clerical salaries  10,150  

Payroll taxes/employee benefits               4,800    

Medical supplies and drugs          15,000  

Professional fees              3,000    

Dues and publications     2,400    

Janitorial service              1,200    

Office supplies   1,500    

Repairs and maintenance             1,200    

Utilities and telephone   6,000    

Depreciation       30,000  

Interest 3,100    

Other     5,000    

Total Expenses                  100,000

Income from Operations                              80,000

Nonoperating Gains (Losses) Interest Income                      -0-

Nonoperating Gains, Net                             -0-

Net Income                        80,000

 

 

Doctors Smith and Brown Balance Sheet March 31, 2___

Assets                  

Current Assets                 

Cash and cash equivalents            25,000  

Patient accounts receivable         40,000  

Inventories—supplies and drugs 5,000    

Total Current Assets                       70,000

Property, Plant, and Equipment                

Buildings and Improvements        500,000              

Equipment           800,000              

Total      1,300,000           

Less Accumulated Depreciation  (480,000)            

Net Depreciable Assets  820,000              

Land      100,000              

Property, Plant, and Equipment, Net                      920,000

Other Assets                      10,000

Total Assets                       1,000,000

Liabilities and Capital                    

Current Liabilities                           

Current maturities of long-term debt       10,000  

Accounts payable and accrued expenses                20,000  

Total Current Liabilities                 30,000

Long-Term Debt               180,000              

Less Current Portion of Long-Term Debt (10,000)              

Net Long-Term Debt                      170,000

Total Liabilities                  200,000

Capital                 800,000

Total Liabilities and Capital                         1,000,000

 

 

Doctors Smith and Brown Statement of Changes in Capital for the Three Months Ended March 31, 2___

Beginning Balance           $720,000

Net Income         80,000

Ending Balance  $800,000

Example 11A: Components of Balance Sheet and Income Statement

The “Accounts Receivable (net)” in Exhibit 11–1 means the accounts receivable figure of $250,000 on the balance sheet is net of the allowance for bad debts. If the allowance for bad debts is raised on the balance sheet, then bad debt expense (a.k.a. provision for doubtful accounts) on the income statement (a.k.a. statement of revenue and expense) also rises. Think of these two accounts as a pair.

 

Practice Exercise 11–II: Components of Balance Sheet and Income Statement

Refer to Doctors Smith and Brown’s balance sheet, where patient accounts receivable is stated at $40,000. Do you think this figure is net of an allowance for bad debts?

 

Assignment Exercise 11–2: Components of Balance Sheet and Income Statement

Refer to the Metropolis Health System (MHS) balance sheet and statement of revenue and expense in the MHS Case Study appearing in Chapter 33. Patient accounts receivable of $7,400,000 is shown as net of $1,300,000 allowance for bad debts (8,700,000 2 1,300,000 5 7,400,000). (1) What percentage of gross accounts receivable is the allowance for bad debts? (2) If the allowance for bad debts is raised to $1,500,000, where does the extra $200,000 go?

Example 11B: Components of Balance Sheet and Income Statement

Refer to Exhibit 11–1 and Exhibit 11–2’s Westside Clinic statements. The “Property, Plant, and Equipment (net)” total in Exhibit 11–1 means the property, plant, and equipment figure of $360,000 on the balance sheet is net of the reserve for depreciation. If the reserve for depreciation is raised on the balance sheet, then the depreciation expense on the income statement (a.k.a. statement of revenue and expense) also rises. Think of these two accounts as another pair.

 

Practice Exercise 11–III: Components of Balance Sheet and Income Statement

Refer to Doctors Smith and Brown’s balance sheet, where buildings and equipment are both stated as net (the $820,000 figure), but land is not. Do you recall why this is so?

 

Assignment Exercise 11–3: Components of Balance Sheet and Income Statement

Refer to the Metropolis Health System (MHS) balance sheet and statement of revenue and expense in the MHS Case Study appearing in Chapter 33. Property, plant, and equipment of $19,300,000 is shown as “net,” meaning net of the reserve for depreciation. If the $19,300,000 is reduced by $200,000 (meaning the reserve for depreciation has risen), what happens on the income statement?

Week 2: Connection to the Real World (Balance Sheet and Income Statement) Complete Assignment Exercise 11-2 Components of a Balance Sheet and Income Statement on pages 542–545.
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