Question 1 The Sydney Hospital provides a range of health care services and its payment terms are net 30 days, meaning p
Posted: Sun Apr 17, 2022 6:57 pm
Question 1 The Sydney Hospital provides a range of health care
services and its payment terms are net 30 days, meaning payment
from patients is due 30 days after their discharge from the
hospital. Suppose the following transactions take place: • March 5
- Patients receive health care services of $60,000 • March 10 –
Patients receive health care services of $250,000 on terms of net
30 days. • March 15 - Patients pay $60,000 for health care services
received on March 5. • March 30 - hospital pays $50,000 for
salaries for work done in March • April 1 -The hospital purchases
drugs for $160,000 on terms of net 30 days. In April the hospital
uses $35,000 worth of drugs. In May $65,000 of drugs are used and
in June $60,000 of drugs are used. • April 6 - Patients receive
health care services of $250,000 on terms of net 30 days. • April 7
– phone bill received for $1,000 for telephone services in March. •
April 10 – Patients pay $250,000 for services received in March. •
April 30 - Hospital pays $55,000 for salaries for work done in
April. • May 1 – Hospital pays phone bill for $1,000 received on
April 7. • May 5 - The hospital pays $160,000 for drugs received in
April. • May 6 - Patients pay $250,000 for services received in
April. • May 15 – Patients receive health services of $200,000 on
terms of net 30 days. • May 30 - Hospital pays $45,000 for salaries
for work done in May. • June 5 - Patients receive $55,000 in
services and pay for them on the same day. • June 29 – Patients pay
$200,000 for services received in May. • June 30 - Hospital pays
$40,000 for salaries for work done in June.
Required:
a) Calculate this hospital's profit or loss for each of the
months of March, April, May and June on both a cash accounting and
accrual accounting basis. Make sure you show your calculations. You
need to do a separate profit and loss statement for each month.
b) What month was the most profitable for the hospital? Explain
your answer.
c) Calculate the Hospital’s profit or loss for the four months
ending June on both a cash accounting and accrual accounting basis?
If you get the same answer for both methods explain why this is so.
If you get a different answer for the cash and accrual methods
explain why this happened.
services and its payment terms are net 30 days, meaning payment
from patients is due 30 days after their discharge from the
hospital. Suppose the following transactions take place: • March 5
- Patients receive health care services of $60,000 • March 10 –
Patients receive health care services of $250,000 on terms of net
30 days. • March 15 - Patients pay $60,000 for health care services
received on March 5. • March 30 - hospital pays $50,000 for
salaries for work done in March • April 1 -The hospital purchases
drugs for $160,000 on terms of net 30 days. In April the hospital
uses $35,000 worth of drugs. In May $65,000 of drugs are used and
in June $60,000 of drugs are used. • April 6 - Patients receive
health care services of $250,000 on terms of net 30 days. • April 7
– phone bill received for $1,000 for telephone services in March. •
April 10 – Patients pay $250,000 for services received in March. •
April 30 - Hospital pays $55,000 for salaries for work done in
April. • May 1 – Hospital pays phone bill for $1,000 received on
April 7. • May 5 - The hospital pays $160,000 for drugs received in
April. • May 6 - Patients pay $250,000 for services received in
April. • May 15 – Patients receive health services of $200,000 on
terms of net 30 days. • May 30 - Hospital pays $45,000 for salaries
for work done in May. • June 5 - Patients receive $55,000 in
services and pay for them on the same day. • June 29 – Patients pay
$200,000 for services received in May. • June 30 - Hospital pays
$40,000 for salaries for work done in June.
Required:
a) Calculate this hospital's profit or loss for each of the
months of March, April, May and June on both a cash accounting and
accrual accounting basis. Make sure you show your calculations. You
need to do a separate profit and loss statement for each month.
b) What month was the most profitable for the hospital? Explain
your answer.
c) Calculate the Hospital’s profit or loss for the four months
ending June on both a cash accounting and accrual accounting basis?
If you get the same answer for both methods explain why this is so.
If you get a different answer for the cash and accrual methods
explain why this happened.