Prepare the journal entries for December

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Question - Corona Hope Hospital began operations in December 2019 and had patient service revenues totaling $2,000,000 (based on customary rates) for the month. Of this, $1,200,000 is billed to patients, representing their insurance deductibles and copayments. The balance is billed to third party payors, including insurance companies and government health care agencies. Corona Hope estimates that 20 percent of these third-party pay or charges will be deducted by contractual adjustment. The hospital's fiscal year ends on December 31.

Required -

1. Prepare the journal entries for December 2019. Assume 15 percent of the amounts billed to patients will be reduced through implicit price adjustments.

2. Prepare the journal entries for 2020 assuming the following: $99,000 is collected from the patients during the year and $9,800 of price adjustments are granted to individuals. Actual contractual adjustments total $186,000. The remaining receivable from third- party payors is collected.

Reference no: EM132521580

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