The following transactions occurred during the year. Record these transactions:

a. HHL took out a long-term loan for 3 million.

b. HHL purchased $1 million in inventory with cash.

c. HHL purchased equipment that cost $150,000 on account. The equipment is expected to last 15 years and has no salvage value.

d. $540,865,000 (net of allowances and charity care) was billed for patient services. The hospital estimates that 5% of these bills will be bad debt.

e. $875,000 of inventory was used.

f. Donations of $400,000 were received in cash.

g. HHL pays in cash for a 2-year mal-practice insurance premium at a cost of $5 million. One-half of the premium is for next year, and the other is for the following year.

h. HHL pays $12,560,000 in accounts payable.

i. HHL workers earned $259,000,000 in wages for the year. The hospital paid $282,000,000 in cash. It also paid out $60 million in benefits, all in cash.

j. The equipment purchased in transaction c was paid for in cash.

k. $370,500,000 from bills sent to patients was received in cash.

I. HHL collected $25 million in outstanding patient bills in cash.

m. The board is concerned that too much debt outstanding is bad for the organization. The board is chooses to accelerate their debt payments for the year. HHL paid out $51 million in long-term debt principal and $3 million of interest in cash.

n. Depreciation for the year was recorded- $23 million for existing fixed assets. Also, calculate the new depreciation necessary for the new equipment purchased this year, assuming straight-line depreciation.

o. The contract with the IT company chosen is signed. The initial contract cost is paid, as well as the first year payment.

	Assets														Liabilities											Net Assets
Ch. 18, TYK #2	Cash and cash equivalents	Short-term investments	AR Patient care, less allowance for uncollectible	Inventory	Other-net	Other current assets	Assets limited as to use -current portion	Donor restricted	Investments held by captive insurance companies	Deferred employee compensation plan assets	Less assets limited as to use -current portion	Property, buildings and equipment -net	Investments in real estate -net	Other noncurrent assets	Current portion of long-term debt	Accounts payable and accrued expenses	Accrued salaries and related liabilities	Due to affiliates, net	Professional insurance liabilities -current	Other current liabilities	Long-term debt, less current portion	Accrued pension liability	Deferred employee compensation plan liabilities	Professional insurance liabilities -noncurrent	Other noncurrent liabilities	Unrestricted	Temporarily restricted	Permanently restricted
Beginning Balance	41443	70779	56811	6132	6416	12439	1276	6587	47099	5396	-1276	186481	2518	2470	2804	32189	31590	1927	6738	15534	51250	29183	5396	117686	55462	86109	2116	6587
a)New Long-term Debt
b)Inventory
c)Equipment
d)Pt. Services																													Patient Revenue
Bad Debt																													Bad Debt Expense
e)Inventory Exp.																													Inventory Expense
f)Gift																													Donation Support
g)Malpractice
h)Accts. Pay.
i)Wages																													Wages Expense
Benefits																													Benefits Expense
j)Equipment Purch.
k)Bills to Pts.
l)Out. Pt. Bills Col.
m)Long Debt. Princ.																													Interest Expense
n)Depreciation																													Depreciation Expense
o)IT Contract																													Consulting Expense
Ending Balance	41443	70779	56811	6132	6416	12439	1276	6587	47099	5396	-1276	186481	2518	2470	2804	32189	31590	1927	6738	15534	51250	29183	5396	117686	55462	86109	2116	6587

Prior Year Financials	Hospital for Healthy Living (HHL)
	Consolidated Statements of Financial Position (In Thousands)
	2012	2011
Assets
Current assets:
Cash and cash equivalents	$41,443	$40,798
Short-term investments	70,779	48,038
Accounts receivable:
Patient care, less allowance for uncollectibles
(2012 -$31,085; 2011 -$39,048)	56,811	56,548
Inventory	6,132	9,173
Other-net	6,416	4,662
	181,581	159,219
Other current assets	12,439	12,308
Assets limited as to use -current portion	1,276	5,628
Total current assets	195,296	177,155
Assets limited as to use:
Donor restricted	6,587	6,587
Investments held by captive insurance companies	47,099	40,023
Deferred employee compensation plan assets	5,396	3,894
	59,082	50,504
Less assets limited as to use -current portion	-1,276	-5,628
Assets limited as to use -noncurrent	57,806	44,876
Property, buildings and equipment -net	186,481	198,384
Investments in real estate -net	2,518	2,875
Other noncurrent assets	2,470	2,895
Total assets	$444,571	$426,185
Liabilities and net assets
Current liabilities:
Current portion of long-term debt	$2,804	$8,153
Accounts payable and accrued expenses	32,189	30,090
Accrued salaries and related liabilities	31,590	27,909
Due to affiliates, net	1,927	2,988
Professional insurance liabilities -current	6,738	7,767
Other current liabilities	15,534	2,071
Total current liabilities	90,782	78,978
Long-term debt, less current portion	51,250	57,421
Accrued pension liability	29,183	46,268
Deferred employee compensation plan liabilities	5,396	3,894
Professional insurance liabilities -noncurrent	117,686	106,781
Other noncurrent liabilities	55,462	56,022
Total liabilities	349,759	349,364
Net assets:
Unrestricted	86,109	67,936
Temporarily restricted	2,116	2,298
Permanently restricted	6,587	6,587
Total net assets	94,812	76,821
Total liabilities and net assets	$444,571	$426,185
	Consolidated Statements of Operations
Revenue, gains and other support	2012	2011
Net patient service revenue	541,301	531,154
Other revenue	36,656	8,057
Net assets released from restrictions	1,562	1,356
Total revenue, gains and other support	579,519	540,567
Operating expenses
Salaries and wages	226,400	223,599
Employee benefits	59,154	56,660
Supplies and other expenses	266,356	268,202
Interest and amortization of deferred financing fees	3,093	3,180
Depreciation and amortization	23,137	24,477
Total operating expenses	578,140	576,118
Gain(loss) from operations	1,379	(35,551)
Profession liability insurance program premium revision	0	(2,392)
Excess (deficiency) of revenue over expenses	1,379	(37,943)
Other changes in unrestricted net assets
Change in unrealized gains and losses on investments - other than trading securities	4,036	(8,145)
Net assets released from restrictions for purchases of property, buildings and equipment	527	596
Change in pension liability to be recognized in future periods	12,231	(38,728)
Increase(decrease) in unrestricted net assets	18,173	(84,220)
	Consolidated Statement of Cash Flows
	Year Ended December 31
	2012	2011
	(In Thousands)
Operating activities
Change in net assets	17,991	(83,105)
Adjustments to reconcile change in net assets to net cash
provided by operating activities:
Depreciation and amortization	23,137	24,477
Amortization of deferred financing fees	108	129
Net change in unrealized gains and losses on marketable securities	(4,036)	8,145
Loss on other-than-temporary impairment of investments in captive insurance companies		3,875
Changes in operating assets and liabilities:
Patient care accounts receivable, net	(263)	437
Other assets	(1,568)	(1,218)
Accounts payable and accrued expenses	2,099	(467)
Accrued salaries and related liabilities	3,681	1,110
Due to affiliates, net	(1,061)	509
Accrued pension liability	(17,085)	33,271
Professional insurance liabilities	9,876	32,947
Other liabilities	14,405	(5,342)
Net cash provided by operating activities	47,284	14,768
Investing activities
Acquisitions of property, buildings and equipment, net	(8,734)	(14,938)
(Purchases) sales of investments, net	(18,705)	7,789
Net decrease in investments in real estate	357	357
Net (increase) decrease in assets limited as to use	(5,537)	5,871
Net cash used in investing activities	(32,619)	(921)
Financing activities
Principal repayments on long-term debt	(14,020)	(7,097)
Net cash used in financing activities	(14,020)	(7,097)
Net increase in cash and cash equivalents	645	6,750
Cash and cash equivalents at beginning ofyear	40,798	34,048
Cash and cash equivalents at end of year	41,443	40,798
Supplemental disclosure of non cash investing and financing activities
Assets acquired under capitalized lease obligations	2,500	4,905

Answer rating: 100% (QA)

Answer 1 Current Staff Cost Annual 17500000 Horizon in years 4 Cost of Capital 6 Company 1 Initial Payment 25000000 Company 1 Annual Recurring Cost 10... View the full answer