Transactions (a) through (e) took place in Stoney Heights Private Hospital during the year ending December 31, 2019.
a. Gross revenues of $5,000,000 were earned for service toMedicare patients.
b. Expected contractual adjustments with Medicare, a third-party payor, are $2,500,000; and an allowance for contractual adjustments account is used by Stoney Heights.
c. Medicare cleared charges of $5,000,000 with payments of $2,160,000 and total contractual allowances of $2,840,000 ($2,500,000 + $340,000).
d. Interim payments received fromMedicare amounted to $250,000.
e. The hospital made a lump-sum payment back toMedicare of $100,000.
1. Record the transactions in the general journal.
2. Calculate the amount of net patient service revenues.
3. What is the net
4. What adjustments must be made at year-end to settle up with Medicare and properly report the net patient service revenues after this settlement?
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