[jessanqi]

Hi can anyone please help this question.

According to Wiley’s textbook, patient service reveue is reproted on the accrual basis net of adjustments for contractual and hospital employee discounts.

Please advise!

Thank you!

Under Abbey hospital’s established rate structure, the hospital would have earned patient service revenue of 6,000,000 for the year ended December 31, 20×5. However, Abbey didn’t epect to collect this amount because of charity allowances of $1,000,000 and hospital employee dicounts of $500,000.

for the year ended December 31, 20×5, how much should bbey recorded as patient service revenue?

A. $6,000,000
B. $5,500,000
C. $5,000,000
d. $4,500,000

The answer is A.The facts in this question indicate that uner Abbeys estalished rate structure, a total 46,000,000 in patient service revenue would have been earned for 20×5. According to AICPA’S Audit Guide, Health Care Organizations, patient service revenues should be acounted for at established rates, regardless of whether the hospital expencts to collect the full aount. Hospital employee discounts are a contra-revenue account and charity alowances should be siclosed in the footnotes.

[Anonymous]

Gross patient service revenue is established at a certain rate. Net patient service revenue is the gross net of charity and contractual adjustment.

[Lentilcounter]

Net patient revenue = gross patient revenue – charity services – bad debt – contractual adjustments – policy discounts from gross patient revenues

Gross patient revenue = patient revenue established at the billing rate of the hospital

BEC = 72 (6/08/16)
FAR = ?
REG = ?
AUD = ?

[Author]

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