H F M A’s I n t r o d u c t i o n t o H o s p i t a l A c c o u n t i n g162 604 Insurance expense 2,300 605 Repairs expense 4,100 606 Rent expense 2,800 607 Depreciation expense 9,400 608 Interest expense 1,400 609 Bad debt expense 11,600 610 Other expenses 7,200 Required: (1) Prepare, in general journal form, the necessary closing entries for the year ended December 31, 20X1. (2) Prepare, in good form, the 20X1 statement of operations for Gatorberg Hospital. P8.3. The following is the preadjusted trial balance of Grandtown Hospital at December 31, 20X1, the end of the hospital’s current fiscal year: Acct. No. Dr. Cr. 101 Cash $ 37,500 102 Temporary investments 30,000 103 Accrued interest receivable -0- 104 Accounts receivable 120,000 105 Allowance for uncollectible accounts $ -0- 106 Inventory 14,000 107 Prepaid insurance 3,600 120 Land 25,000 130 Buildings 250,000 131 Accumulated depreciation—buildings -0- 140 Equipment 140,000 141 Accumulated depreciation—equipment -0- 201 Accounts payable 37,400 203 Accrued interest payable -0- 204 Accrued salaries and wages payable -0- 205 Deferred rental income 2,700 250 Bonds payable 150,000 301 Hospital net assets 395,700 302 Revenue and expense summary -0- 401 Routine services revenue 171,200 402 Ancillary services revenue 110,300 403 Interest income -0- 404 Rental income -0- 406 Other operating revenues 23,500 501 Contractual adjustments 22,700 502 Charity care adjustments 31,100 601 Salaries and wages expense 155,600 C h a p t e r E i g h t : A c c o u n t i n g Cy c l e S u m m a r y 163 602 Supplies expense 33,100 603 Utilities expense 14,900 604 Insurance expense -0- 605 Repairs expense 6,400 607 Depreciation expense -0- 608 Interest expense 4,500 609 Bad debt expense -0- 610 Other expenses 2,400 Totals $890,800 $890,800 The following additional information is available: 1. The temporary investment consists of $30,000 (face value) of 8 percent bonds acquired by the hospital on November 1, 20X1. These bonds pay interest annually on November 1, commencing on November 1, 20X2. 2. Of the December 31, 20X1, accounts receivable, it is estimated that 14 percent will eventually prove uncollectible by reason of (1) charity care, 7 percent; (2) contractual adjustments, 4 per- cent; and (3) bad debts, 3 percent. 3. A two-year insurance premium of $3,600 was paid in advance by the hospital on January 1, 20X1. 4. The hospital building, which was acquired on January 1, 20X1, has an estimated useful life of 50 years and a 20 percent salvage value. 5. The equipment, which was acquired on January 1, 20X1, has an estimated useful life of 12 years and a $20,000 salvage value. 6. On January 1, 20X1, the hospital issued $150,000 of 20-year, 6 percent bonds at face value. These bonds pay interest semiannu- ally on January 1 and July 1, commencing July 1, 20X1. 7. Unpaid salaries and wages at December 31, 20X1, amounted to $12,300. 8. The hospital received one year’s rent of $2,700 ...

1. H F M A’s I n t r o d u c t i o n t o H o s p i t a l A c c o u n t
i n g162
604 Insurance expense 2,300
605 Repairs expense 4,100
606 Rent expense 2,800
607 Depreciation expense 9,400
608 Interest expense 1,400
609 Bad debt expense 11,600
610 Other expenses 7,200
Required: (1) Prepare, in general journal form, the necessary
closing
entries for the year ended December 31, 20X1. (2) Prepare, in
good
form, the 20X1 statement of operations for Gatorberg Hospital.
P8.3. The following is the preadjusted trial balance of
Grandtown Hospital
at December 31, 20X1, the end of the hospital’s current fiscal
year:
Acct.
No. Dr. Cr.
101 Cash $ 37,500
102 Temporary investments 30,000
103 Accrued interest receivable -0-
104 Accounts receivable 120,000
105 Allowance for uncollectible accounts $ -0-
106 Inventory 14,000
107 Prepaid insurance 3,600
120 Land 25,000

2. 130 Buildings 250,000
131 Accumulated depreciation—buildings -0-
140 Equipment 140,000
141 Accumulated depreciation—equipment -0-
201 Accounts payable 37,400
203 Accrued interest payable -0-
204 Accrued salaries and wages payable -0-
205 Deferred rental income 2,700
250 Bonds payable 150,000
301 Hospital net assets 395,700
302 Revenue and expense summary -0-
401 Routine services revenue 171,200
402 Ancillary services revenue 110,300
403 Interest income -0-
404 Rental income -0-
406 Other operating revenues 23,500
501 Contractual adjustments 22,700
502 Charity care adjustments 31,100
601 Salaries and wages expense 155,600
C h a p t e r E i g h t : A c c o u n t i n g Cy c l e S u m m a r
y 163
602 Supplies expense 33,100
603 Utilities expense 14,900
604 Insurance expense -0-
605 Repairs expense 6,400
607 Depreciation expense -0-
608 Interest expense 4,500
609 Bad debt expense -0-
610 Other expenses 2,400
Totals $890,800 $890,800

3. The following additional information is available:
1. The temporary investment consists of $30,000 (face value) of
8
percent bonds acquired by the hospital on November 1, 20X1.
These bonds pay interest annually on November 1, commencing
on November 1, 20X2.
2. Of the December 31, 20X1, accounts receivable, it is
estimated
that 14 percent will eventually prove uncollectible by reason of
(1) charity care, 7 percent; (2) contractual adjustments, 4 per-
cent; and (3) bad debts, 3 percent.
3. A two-year insurance premium of $3,600 was paid in advance
by
the hospital on January 1, 20X1.
4. The hospital building, which was acquired on January 1,
20X1, has
an estimated useful life of 50 years and a 20 percent salvage
value.
5. The equipment, which was acquired on January 1, 20X1, has
an
estimated useful life of 12 years and a $20,000 salvage value.
6. On January 1, 20X1, the hospital issued $150,000 of 20-year,
6
percent bonds at face value. These bonds pay interest semiannu-
ally on January 1 and July 1, commencing July 1, 20X1.
7. Unpaid salaries and wages at December 31, 20X1, amounted
to
$12,300.

4. 8. The hospital received one year’s rent of $2,700 in advance on
June 1, 20X1.
Required: (1) Prepare a worksheet to develop financial
statements
in the manner illustrated in Figure 8.3. (2) Prepare, in good
form,
a complete set of financial statements for 20X1. (3) Prepare, in
general journal form, the necessary adjusting entries at
December 31,
20X1, for the year then ended. (4) Prepare, in general journal
form,
the necessary closing entries on December 31, 20X1, for the
year
then ended.
H F M A’s I n t r o d u c t i o n t o H o s p i t a l A c c o u n t
i n g442
Long-term debt 3,530 3,205
Net assets 3,730 3,320
Total $8,000 $7,000
Year Ended 12/31
20X2 20X1
Gross patient services revenues $6,600 $6,000
Deductions from revenues 790 500
Net patient services revenues 5,810 5,500
Other operating revenues 700 500
Total operating revenues 6,510 6,000
Less operating expenses:

5. Nursing services 2,100 1,900
Other professional services 1,600 1,500
Administrative services 1,300 1,100
Other operating services 1,100 1,400
Total operating expenses 6,100 5,900
Excess of revenues over
expenses for the year $ 410 $ 100
Operating expenses include the $900 cost of supplies used, $400
of
depreciation, and $240 of bond interest expense.
Required: (1) Develop a horizontal analysis of these statements.
(2)
Convert the above financial statements to common size. (3) Pre-
pare a ratio analysis of 20X2 operating results. (4) Prepare a
ratio
analysis of the December 31, 20X2, financial position.
P22.2. Careplace Hospital supplies you with the following
information
relating to the 20X1 operations of its radiology department:
Actual Budget
Revenues $966,400 $930,000
Expenses 393,600 372,000
Number of examinations 60,400 62,000
Required: Prepare an analysis of the budget variances for the
radiol-
ogy department’s revenues and expenses for 20X1
P22.3. Wellplace Hospital provides you with the following
financial state-
ments for 20X2 and 20X1:

6. C h a p t e r Tw e n t y - Tw o : A n a l y s i s a n d I n t e r p
r e t a t i o n o f F i n a n c i a l St a t e m e n t s 443
December 31
20X2 20X1
Cash $ 168 $ 211
Temporary investments 126 34
Receivables—patients, net 1,011 893
Inventory 296 315
Prepaid expenses 25 29
Total current assets 1,626 1,482
Long-term investments 466 442
Plant assets, net 8,126 8,185
Other assets 167 88
Total $10,385 $10,197
Current portion of long-term debt $ 180 $ 180
Notes payable 125 75
Accounts payable 196 202
Accrued expenses payable 238 217
Payroll taxes withheld 81 63
Advances from third-party payers 75 55
Other 42 29
Total current liabilities 937 821
Long-term debt 1,718 1,865
Total liabilities 2,655 2,686
Net assets 7,730 7,511
Total $10,385 $10,197
Year Ended 12/31
20X2 20X1

7. Gross patient services revenues $ 8,830 $ 7,326
Deductions from patient
services revenues 1,430 1,465
Net patient services revenues 7,400 5,861
Other operating revenues 505 407
Total operating revenues 7,905 6,268
Less operating expenses:
Nursing services 2,560 2,197
Other professional services 2,050 1,615
Administrative services 1,350 1,033
Other operating services 1,925 1,614
Total operating expenses 7,885 6,459
Operating income (loss) 20 (191)
Nonoperating revenues, net 224 176
Excess of revenues over expenses
(loss) for the year $ 244 $ (15)
H F M A’s I n t r o d u c t i o n t o H o s p i t a l A c c o u n t
i n g444
The other operating services include expenses of $520 of
depreciation,
$110 of interest expense, and $790 of insurance expense.
Required: (1) Develop a horizontal analysis of these statements.
(2)
Convert the above financial statements to common size. (3) Pre-
pare a ratio analysis of 20X2 operating results. (4) Prepare a

8. ratio
analysis of the December 31, 20X2 financial position.
P22.4. Starplace Hospital provides you with the following
information:
December 31
20X2 20X1
Cash $ 50,000 $ 35,000
Temporary investments 80,000 50,000
Receivables, net 140,000 110,000
Inventory 35,000 28,000
Prepaid expenses 12,000 16,000
Long-term investments 230,000 190,000
Plant assets, net 420,000 421,000
$967,000 $850,000
Notes payable $ 75,000 $ 25,000
Accounts payable 21,000 19,000
Accrued expenses payable 33,000 28,000
Other current liabilities 7,000 22,000
Long-term debt 500,000 450,000
Net assets 331,000 306,000
$967,000 $850,000
Year Ended 12/31
20X2 20X1
Total operating revenues $840,000 $780,000
Cost of supplies used 210,000 186,000
Depreciation expense 90,000 90,000
Bond interest expense 30,000 27,000
Net patient services revenues 960,000 890,000
Excess of revenues over expenses 25,000 16,000

9. Required: (1) Prepare a ratio analysis of operating results for
20X2.
(2) Prepare a ratio analysis of the hospital’s financial position
at
December 31, 20X2.
P22.5. Rightplace Hospital supplies you with the following
information
relating to the 20X1 operations of one of its nursing units: