A private not-for-profit health care entity provides its patients with services that would normally be charged at $1 million. However, it estimates a $200,000 reduction because of contractual adjustments. It expects another $100,000 reduction because of bad debts. Finally, the organization does not expect to collect $400,000 because this amount is deemed to be charity care. Which of the following is correct?
a. Patient service revenues = $1 million; net patient service revenues = $300,000.
b. Patient service revenues = $1 million; net patient service revenues = $400,000.
c. Patient service revenues = $600,000; net patient service revenues = $300,000.
d. Patient service revenues = $600,000, net patient service revenues = $400,000.
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