A not- for- profit hospital is seeking a loan from a bank to finance a major acquisition of equipment. The hospital is preparing its financial statements for 2012, which the bank’s loan officer wants to review before completing the loan agreement. Based on preliminary data, the hospital’s treasurer thinks the loan officer will be troubled with the amount the hospital will report as “excess of revenues over expenses” in the hospital’s statement of operations. The treasurer knows the hospital comptroller plans to report the allowance for bad debts at 20 percent of patient accounts receivable, the same rate used in preparing the 2010 and 2011 financial statements. The treasurer goes to the comptroller and says: “I’d really like to improve our bottom line a bit. Seems to me the economy is better than last year. I suggest you reduce the bad debts allowance to 12 percent.” What should the comptroller do?
Answer to relevant Questions(Fill in the blanks) 1. The FASB publishes its Accounting Standards Codification (ASC) as the source of accounting and reporting guidance for _______ hospitals. 2. FASB standards _______ (lways, sometimes, never) apply to ...The Metro County Hospital could not collect the amount billed to a patient who declared bank-ruptcy and had no assets with which to pay his debts. Assuming the patient owed the hospital $ 3,000, prepare the entry or entries ...Ellen Falk Hospital, a not- for- profit hospital, had the following transactions during the year ended December 31, 2012. Prepare journal entries necessary to record the transactions. The hospital does not use fund ...The Maggie King Hospital, a not- for- profit hospital, had the following transactions regarding its patient service billings. 1. The total services provided by the hospital to all patients during the year amounted to $ 19 ...What is the purpose of calculating the number of days’ revenue in accounts receivable?
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