Reference no: EM131332361

1. Wellplace Hospital provides you with the following financial statements for 20X2 and 20X1:

	December 31
	20X2	20X1
Cash	$ 168	$ 211
Temporary investments	126	34
Receivables-patients, net	1,011	893
Inventory	296	315
Prepaid expenses	25	29
Total current assets	1,626	1,482
Long-term investments	466	442
Plant assets, net	8,126	8,185
Other assets	167	88
Total	$10,385	$10,197
Current portion of long-term debt	$ 180	$ 180
Notes payable	125	75
Accounts payable	196	202
Accrued expenses payable	238	217
Payroll taxes withheld	81	63
Advances from third-party payers	75	55
Other	42	29
Total current liabilities	937	821
Long-term debt	1,718	1,865
Total liabilities	2,655	2,686
Net assets	7,730	7,511
Total	$10,385	$10,197
	Year Ended 12/31
	20X2	20X1
Gross patient services revenues	$ 8,830	$ 7,326
Deductions from patient services revenues	1,430	1,465
Net patient services revenues	7,400	5,861
Other operating revenues	505	407
Total operating revenues	7,905	6,268
Less operating expenses:
Nursing services	2,560	2,197
Other professional services	2,050	1,615
Administrative services	1,350	1,033
Other operating services	1,925	1,614
Total operating expenses	7,885	6,459
Operating income (loss)	20	(191)
Nonoperating revenues, net	224	176
Excess of revenues over expenses (loss) for the year	$ 244	$ (15)

The other operating services include expenses of $520 of depreciation, $110 of interest expense, and $790 of insurance expense.

Required:

(1) Develop a horizontal analysis of these statements.
(2) Convert the above financial statements to common size.
(3) Prepare a ratio analysis of 20X2 operating results.
(4) Prepare a ratio analysis of the December 31, 20X2 financial position.

2. The following is the preadjusted trial balance of Grandtown Hospital at December 31, 20X1, the end of the hospital's current fiscal year:
The following additional information is available:

Acct. No.		Dr.	Cr.
101	Cash	$ 37,500
102	Temporary investments	30,000
103	Accrued interest receivable	-0-
104	Accounts receivable	120,000
105	Allowance for uncollectible accounts		$ -0-
106	Inventory	14,000
107	Prepaid insurance	3,600
120	Land	25,000
130	Buildings	250,000
131	Accumulated depreciation-buildings		-0-
140	Equipment	140,000
141	Accumulated depreciation-equipment		-0-
201	Accounts payable		37,400
203	Accrued interest payable		-0-
204	Accrued salaries and wages payable		-0-
205	Deferred rental income		2,700
250	Bonds payable		150,000
301	Hospital net assets		395,700
302	Revenue and expense summary		-0-
401	Routine services revenue		171,200
402	Ancillary services revenue		110,300
403	Interest income		-0-
404	Rental income		-0-
406	Other operating revenues		23,500
501	Contractual adjustments	22,700
502	Charity care adjustments	31,100
601	Salaries and wages expense	155,600
602	Supplies expense	33,100
603	Utilities expense	14,900
604	Insurance expense	-0-
605	Repairs expense	6,400
607	Depreciation expense	-0-
608	Interest expense	4,500
609	Bad debt expense	-0-
610	Other expenses	2,400
	Totals	$890,800	$890,800

1. The temporary investment consists of $30,000 (face value) of 8 percent bonds acquired by the hospital on November 1, 20X1. These bonds pay interest annually on November 1, commencing on November 1, 20X2.

2. Of the December 31, 20X1, accounts receivable, it is estimated that 14 percent will eventually prove uncollectible by reason of
(1) charity care, 7 percent; (2) contractual adjustments, 4 per- cent; and (3) bad debts, 3 percent.

3. A two-year insurance premium of $3,600 was paid in advance by the hospital on January 1, 20X1.

4. The hospital building, which was acquired on January 1, 20X1, has an estimated useful life of 50 years and a 20 percent salvage value.

5. The equipment, which was acquired on January 1, 20X1, has an estimated useful life of 12 years and a $20,000 salvage value.

6. On January 1, 20X1, the hospital issued $150,000 of 20-year, 6 percent bonds at face value. These bonds pay interest semiannu- ally on January 1 and July 1, commencing July 1, 20X1.

7. Unpaid salaries and wages at December 31, 20X1, amounted to $12,300.

8. The hospital received one year's rent of $2,700 in advance on June 1, 20X1.

Required:

(1) Prepare a worksheet to develop financial statements in the manner illustrated in table.
(2) Prepare, in good form, a complete set of financial statements for 20X1.
(3) Prepare, in general journal form, the necessary adjusting entries at December 31, 20X1, for the year then ended.
(4) Prepare, in general journal form, the necessary closing entries on December 31, 20X1, for the year then ended.