Florida Hospital Apopka, a not-for profit organization, began 2018 with the following account balances on January...

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Florida Hospital Apopka, a not-for profit organization, began 2018 with the following account balances on January 1:

Cash	$70,000
Accounts receivable	245,000
Allowance for doubtful accounts	18,000
Supplies inventory	24,000
Property and Equipment	1,500,000
Accumulated depreciation	300,000
Accounts payable	21,000
Notes payable (short-term bank loans)	500,000
Net assets	1,000,000

During 2018, the accounting clerk recorded the following transactions (Florida Hospital Apopka’s year end is December 31):

Transaction Number	Event	Amount
1.	Billed patients for services rendered	$1,700,000
2.	Purchased medical supplies on credit	12,000
3.	Employee salaries earned during 2018	712,000
4.	Employee salaries paid during 2018	683,000
5.	Annual depreciation on Property and Equipment	150,000
6.	Received a bank loan (short-term)	750,000
7.	Cash collections on patient billings	1,124,000
8.	Estimated bad debts for 2018 billings	44,000
9.	Made payment on bank loan	575,000
10.	Used medical supplies inpatient care	10,000

a. Prepare a properly formatted 2018 balance sheet and income statement for the hospital using the beginning account balances and incorporating the effects of each transaction.

b. What is Florida Hospital Apopka’s net working capital for 2018?

c. What is Florida Hospital Apopka’s debt ratio?

d. How does Florida Hospital Apopka’s debt ratio compare with the debt ratio for Sunnyvale?

business accounting

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Answer 1

Answer #1

a) INCOME STATEMENT 1700000 Service revenue Operating expenses: Salaries expense Supplies expense Depreciation expense-PPE Ba

d) Debt ratio of sunnyvale = 100747/154815

= 65.08%

The debt ratio is very high in Sunnyvale as compared to Florida

As we are concerned with Florida

The debt ratio will indicate the leverage of company, higher the debt ratio the more leveraged the company will be , which indicates more financial risk.

For Florida the financial risk is very low as compared with Sunnyvale.

Thank you. I hope you understand.

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Answer 2

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