Reference no: EM132878335

Question - St. Joseph's Hospital began operations in December 2016 and had patient service revenues totaling $1,070,000 (based on customary rates) for the month. Of this, $130,000 is billed to patients, representing their insurance deductibles and co-payments. The balance is billed to third-party payers, including insurance companies and government health care agencies. St. Joseph estimates that 20 percent of these third-party payer charges will be deducted by contractual adjustment. The Hospital's fiscal year ends on December 31.

Required -

1. Prepare the journal entries for December 2016. Assume that 15 percent of the amounts billed to patients will be uncollectible.

2. Prepare the journal entries for 2017 assuming the following:

-$110,000 is collected from the patients during the year and $10,500 is written off.

-Actual contractual adjustments total $226,000. The remaining receivable from third-party payers is collected.