Williams Medical Center (WMC) is a not-for-profit health care organization that begins operations in 2024. In its
Question:
Williams Medical Center (WMC) is a not-for-profit health care organization that begins operations in 2024. In its first year of operations, WMC earned $200,000 of revenues for services rendered. Of this amount, WMC collects $150,000 in cash and the other $50,000 was still owed to it at the end of 2024.
During 2024, WMC used $190,000 of total expenses. WMC paid out $175,000 of these expenses in cash during 2024 and still owes the other $15,000 to creditors at the end of 2024.
a. What is the profit or loss to WMC for the year on a cash basis?
b. What is the profit or loss to WMC for the year on an accrual basis?
c. If WMC ceased operating after 2024 but collected what is owed to it and paid out what it owed, what would the profit or loss to WMC for 2025 be on a cash basis? On an accrual basis?
Step by Step Answer:
Accounting Fundamentals For Health Care Management
ISBN: 9781284265200
4th Edition
Authors: Steven A. Finkler, David M. Ward, Thad Calabrese