Chat with us, powered by LiveChat Week 2: Connection to the Real World (Balance Sheet and Income Statement) - Essayabode

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 OutcomeStudent 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 OutcomeStudent 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 OutcomeStudent 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?