Question

mason hospital, a governmental hospital, recorded during its fiscal year ended september 30, gross patient services valued at $15,000,000, excluding charity care services of $1,600,000. however, contractual adjustments by third-party payors amounted to $1,200,000. in may of that year it received donated medical supplies worth $2,000; supplies it had planned to purchase had it not been for the gift. at year-end, the governing board set aside investments in the amount of $500,000 for future plant expansion and $250,000 to be invested with the related earnings used for a special prenatal care program. 1. in its operating statement for the year ended september 30, how much should mason report as net patient services revenue? 2. for the year ended september 30, how should the donation of medical supplies be reported? multiple choice the donation should be reported as other revenue in the amount of $2,000 and as either supplies inventory or expense, depending on whether the donation was used in the current period. the donation should not be reported as there was no outflow of cash. the donation should be reported as donation received in the statement of changes in net assets in the amount of $2,000 and as either supplies inventory or expense, depending on whether the donation was used in the current period. the entire donation should be reported as other revenue in the amount of $2,000 and as supplies expense in the current period. the entire donation should be reported as donation received in the statement of changes in net assets in the amount of $2,000 and as supplies expense in the current period. 3. what amount of unrestricted net position should mason report in its balance sheet as board designated, assuming it had no board designated net position at the beginning of the year?

Answer 1

1. The net patient services revenue should be $13,800,000. 2. The donation of medical supplies should be reported as other revenue in the amount of $2,000 and as supplies expense in the current period. 3. Mason should report $750,000 as unrestricted net position.

Step-by-step explanation:

1. To calculate net patient services revenue, we need to subtract the contractual adjustments by third-party payors from the gross patient services. In this case, the contractual adjustments amount to $1,200,000. So the net patient services revenue would be $15,000,000 - $1,200,000 = $13,800,000.

2. The donation of medical supplies should be reported as other revenue in the amount of $2,000 and as supplies expense in the current period. This means that the $2,000 should be recorded as revenue and also as an expense to account for the supplies used.

3. Assuming Mason had no board designated net position at the beginning of the year, it should report $750,000 as unrestricted net position. This includes $500,000 set aside for future plant expansion and $250,000 to be invested with the related earnings used for a special prenatal care program.