Reference no: EM133116472

Question - St. Luke's Hospital is a nonprofit hospital. For the hospital's calendar year ending December 31, 2022, prepare journal entries to record the transactions listed in a. through n. Then compute service revenues.

a. Third-parties payers and direct-pay patients were billed $6,570,000 at the hospital's established billing rates.

b. The hospital determined that certain of its patients qualified for charity care and that it would not seek to collect $850,000 at established billing rates from direct-pay patients.

c. The hospital estimated contractual adjustments for the year of $1,650,000.

d. The hospital originally estimated uncollectible amounts from direct-pay patients to be $240,000 (recall that original estimated uncollectible amounts reduce revenue; only estimates specific to an individual patient are reported as bad debt expense).

e. The hospital received capitation premiums of $2,530,000. It estimated that the cost of providing this care was $1,890,000.

f. The hospital received payments from third-party payers and direct-pay patients totaling $3,530,000.

g. The hospital received contributions of $1,150,000 that were restricted by donors for building a new urgent care wing.

h. The hospital paid salaries and wages of $4,500,400 in cash; these amounts are reported as patient care expense.

i. The fair value of investments required to be held in perpetuity increased by $25,400.

j. The hospital received cash from interest and dividend income of $9,000 on investments without donor restrictions.

k. The hospital used $1,315,000 of net assets with donor restrictions to construct a new urgent care wing, consistent with the restrictions created by the donors.

l. The hospital reported depreciation expense of $435,000.

m. The hospital used drug inventories of $385,000.

n. The hospital incurred other operating costs for patient care of $295,000 on credit.

Required - Compute net patient service revenue (3 adjustments) and premium service revenue using transaction prices.