TWO ACCOUNTING PROBLEMS highlighted in attached doc Due Friday, Dec 2nd at 9:00am PST

H F M A’s I n t r o d u c t i o n t o H o s p i t a l A c c o u n t i n g442

Long-term debt 3,530 3,205 Net assets 3,730 3,320 Total $8,000 $7,000

Year Ended 12/31 20X2 20X1

Gross patient services revenues $6,600 $6,000 Deductions from revenues 790 500 Net patient services revenues 5,810 5,500 Other operating revenues 700 500 Total operating revenues 6,510 6,000 Less operating expenses:

Nursing services 2,100 1,900 Other professional services 1,600 1,500 Administrative services 1,300 1,100 Other operating services 1,100 1,400

Total operating expenses 6,100 5,900 Excess of revenues over

expenses for the year $ 410 $ 100

Operating expenses include the $900 cost of supplies used, $400 of depreciation, and $240 of bond interest expense. Required: (1) Develop a horizontal analysis of these statements. (2) Convert the above financial statements to common size. (3) Pre- pare a ratio analysis of 20X2 operating results. (4) Prepare a ratio analysis of the December 31, 20X2, financial position.

P22.2. Careplace Hospital supplies you with the following information relating to the 20X1 operations of its radiology department:

Actual Budget Revenues $966,400 $930,000 Expenses 393,600 372,000 Number of examinations 60,400 62,000

Required: Prepare an analysis of the budget variances for the radiol- ogy department’s revenues and expenses for 20X1

P22.3. Wellplace Hospital provides you with the following financial state- ments for 20X2 and 20X1:

C h a p t e r Tw e n t y - Tw o : A n a l y s i s a n d I n t e r p r e t a t i o n o f F i n a n c i a l St a t e m e n t s 443

December 31 20X2 20X1

Cash $ 168 $ 211 Temporary investments 126 34 Receivables—patients, net 1,011 893 Inventory 296 315 Prepaid expenses 25 29 Total current assets 1,626 1,482 Long-term investments 466 442 Plant assets, net 8,126 8,185 Other assets 167 88 Total $10,385 $10,197 Current portion of long-term debt $ 180 $ 180 Notes payable 125 75 Accounts payable 196 202 Accrued expenses payable 238 217 Payroll taxes withheld 81 63 Advances from third-party payers 75 55 Other 42 29 Total current liabilities 937 821 Long-term debt 1,718 1,865 Total liabilities 2,655 2,686 Net assets 7,730 7,511 Total $10,385 $10,197

Year Ended 12/31 20X2 20X1

Gross patient services revenues $ 8,830 $ 7,326 Deductions from patient

services revenues 1,430 1,465 Net patient services revenues 7,400 5,861 Other operating revenues 505 407 Total operating revenues 7,905 6,268 Less operating expenses:

Nursing services 2,560 2,197 Other professional services 2,050 1,615 Administrative services 1,350 1,033 Other operating services 1,925 1,614

Total operating expenses 7,885 6,459 Operating income (loss) 20 (191) Nonoperating revenues, net 224 176 Excess of revenues over expenses

(loss) for the year $ 244 $ (15)

H F M A’s I n t r o d u c t i o n t o H o s p i t a l A c c o u n t i n g444

The other operating services include expenses of $520 of depreciation, $110 of interest expense, and $790 of insurance expense. Required: (1) Develop a horizontal analysis of these statements. (2) Convert the above financial statements to common size. (3) Pre- pare a ratio analysis of 20X2 operating results. (4) Prepare a ratio analysis of the December 31, 20X2 financial position.

P22.4. Starplace Hospital provides you with the following information:

December 31 20X2 20X1

Cash $ 50,000 $ 35,000 Temporary investments 80,000 50,000 Receivables, net 140,000 110,000 Inventory 35,000 28,000 Prepaid expenses 12,000 16,000 Long-term investments 230,000 190,000 Plant assets, net 420,000 421,000

$967,000 $850,000 Notes payable $ 75,000 $ 25,000 Accounts payable 21,000 19,000 Accrued expenses payable 33,000 28,000 Other current liabilities 7,000 22,000 Long-term debt 500,000 450,000 Net assets 331,000 306,000

$967,000 $850,000

Year Ended 12/31 20X2 20X1

Total operating revenues $840,000 $780,000 Cost of supplies used 210,000 186,000 Depreciation expense 90,000 90,000 Bond interest expense 30,000 27,000 Net patient services revenues 960,000 890,000 Excess of revenues over expenses 25,000 16,000

Required: (1) Prepare a ratio analysis of operating results for 20X2. (2) Prepare a ratio analysis of the hospital’s financial position at December 31, 20X2.

P22.5. Rightplace Hospital supplies you with the following information relating to the 20X1 operations of one of its nursing units: