Question

Q1. What is the purpose of a Journal and a Ledger? (1M)

Q2. The following are account balances (in thousands) of International Medical Service Center. Prepare a statement of operations for the year ended December 31, 2018 (4M)

Net property and equipment	SAR 2,000
Accounts receivable	SAR2,000
Medical claims payable	SAR45,000
Patient service revenue (net of contractuals)	SAR 950,000
Supply expense	SAR 255,000
Net assets released from restriction for operations	SAR 45, 000
Depreciation expense	SAR 35,000
Transfer to parent corporation	SAR 9,500
Labor expense	SAR300,000
Provision for bad debts	SAR12,000
Unrealized gains from available for sale securities	SAR150,000
Net Assets	SAR66,300
Cash & cash equivalents	SAR110,000
Long-term debt	SAR2,700

Answer 1

I can only answer 1 question at a time so I am answering Q1.

Purpose of Journal: A journal is a record of transactions listed as they occur that shows the specific/particular accounts affected by the transaction. For example, your journal for Friday might contain entries for the sales of Item A, Item B and Item C. A journal also tells you about your total sales for a particular day (or between the constant period during which journal is updated).

Purpose of Ledger: For monthly reporting, businesses generally rely on ledgers. The purpose of the ledger is to take the entries made in the journal (hence, journal is a pre-requisite for ledger) and logs and sums up all transactions that affect a particular account. It shows your total periodic sales of Item A (for example), or total of particular type of expense for a period.

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