Question

Medicare had not yet paid Ms. Rivera’s hospital bill but the hospital was confident that Medicare would do so soon at the DRG amount noted in the information.

Mr. Long’s situation as a charity patient was identified by the hospital and they expected no payment for his services.

Attempts to collect Mr. Gonzalez’s bills had ended and the hospital did not believe that they would receive any payment.

Where, if anywhere, would you find these on the Balance Sheet the amounts owed by these three patients and how would they be displayed?

HCA HOLDINGS, INC. CONSOLIDATED INCOME STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013 (Dollars in millions, except per share amounts) 2015 2014 2013 Revenues before the provision for doubtful accounts ... Provision for doubtful accounts ..... Revenues ....................................... Salaries and benefits ........ Supplies ................................ .. Other operating expenses ......... Electronic health record incentive income .......... Equity in earnings of affiliates ....... Depreciation and amortization ....... Interest expense ........... Losses (gains) on sales of facilities .. Losses on retirement of debt Legal claim costs ... $ 43,591 3,913 39,678 18,115 6,638 7,103 (47) (46) 1,904 1,665 $ 40,087 3,169 36,918 16,641 6,262 6,755 (125) (43) 1,820 1,743 (29) 335 $ 38,040 3,858 34,182 15,646 5,970 6,237 (216) (29) 1,753 1,848 5 17 78 135 249 35,721 3,957 1,261 33,437 3,481 1,108 31,236 2,946 950 1,996 440 1,556 2,696 567 2,373 498 1.875 $ 2,129 $ $ Income before income taxes............. Provision for income taxes ........ Net income ................................... Net income attributable to noncontrolling interests ...... Net income attributable to HCA Holdings, Inc. ..... Per share data: Basic earnings per share ........ Diluted earnings per share .......... Shares used in earnings per share calculations (in millions): Basic ......... Diluted ......... $ $ 5.14 4.99 $ $ 4.30 4.16 $ $ 3.50 3.37 ..... 414.193 426.721 435.668 450.352 445.066 461.913

Answer 1

From the information given above,

1. Medicare has not yet paid Ms.Rivera's hospital bill but the hospital was confident that the Medicare would do so the DRG amount of $10000.

Solution: hospital is confident of recovering the amount, the amount would appear under Current Assets, displayed as

Accounts Receivable $10000 in the Balance Sheet.

2. Mr.Long's situation as charity patient was identified and they expected no payment for his services amounting to $18000.

Solution: The amount would appear in the Balance Sheet under current assets in the beginning, displayed as

Accounts Receivables Dr 18000

To Revenue 18000

when it is identified as charity services, the amount is reversed and no longer appear under accounts receivables in the balance sheet.

Revenue deductions- charity services Dr 18000

To Accounts Receivables 18000

3. Mr. Gonzalzes's bill was unable to collect by the hospital for the services rendered.

Solution: The amount would appear under Accounts Receivable and create a Provision for doubtful debts amounting to $28000.

Bad Debts Dr 28000

To provision for doubtful debts 28000

Provision for doubtful debts is reduced from Accounts Receivable,which appears under Current Assets.