Concept explainers
A doctor for the Benson Family Practice performs a sports physical exam for Allison Smythe on February 1. The charge for the exam is $100; Smythe’s insurance company, Cardinal Health, is billed for the entire $100 on February 1. Cardinal Health receives the invoice on February 2, and enters the amount into its payment system on February 4. Benson Family Practice receives the $100 payment from Cardinal Health on February 20. On which date would Benson Family Practice recognize the revenue for Smythe’s physical?
a. February 1
b. February 2
c. February 4
d. February 20
The date of revenue recognition by B Family practice for AS’s physical exam.
Answer to Problem 1QC
Answer: a) February 1
Explanation of Solution
Revenue recognition principle:
Revenue recognition principle states that every business organization should recognize the revenue when it is earned, no matter, cash related to that obligation is received or not.
A doctor of B Family Practice performs a sports physical exam for AS on February 1. The charge for the exam is $100.
Hence, the revenue is earned on February 1. According to the Revenue recognition principle revenue should be recognized when it is earned, no matter, cash related to that obligation is received or not.
Options b, c and d are the dates indicating the dates when receiving of invoice, recording of transaction and payment are made by B Family practice.
Want to see more full solutions like this?
Chapter 5 Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
- Kemiah has the following insurance information from her employer: Premium: $200/month Deductible: $150 Tier 1: $10 Tier 2: $20 Tier 3: $40 She has never filled a prescription before, and brought her script for phentermine 37.5 mg to the pharmacy for processing. The pharmacy technician at the window informs Kemiah that this drug is not covered, and has a cash price of $37.22. Assuming she has paid the premium for her insurance to be active, what will she have ended up paying for the drug that month, all costs included? O a. $37.22 Ob. $200 O c. $150 O d. $237.22arrow_forward3. On December 30, Nancy Sheridan hired an employee, Tom Shanahan, to help her with the medical billing. His first weekly pay period ends January 7 and he will be paid on January 14. He earns $17.25 per hour. During the 40-hour weekly pay period, Tom worked 48 hours. His Federal income tax is $122. Social Security tax is 6.2% and Medicare tax is 1.45%. a. Compute Tom's pay as of January 7. Regular earnings Date Overtime earnings Gross pay (Wages Expense) b. Record the General Journal entry for Tom's January 7 pay. Date Description Social Federal income tax Security payable tax payable Description Debit Medicare tax payable c. The FUTA rate for Sheridan is 0.6% and the SUTA rate is 5.4%. Record the General Journal entry for the January 14 employer's share payroll taxes. Debit Credit Net pay (Wages payable) Creditarrow_forwardPrepare the New Pharmacy payroll record with the following columns: employee name, number of hours worked, hourly wage, weekly gross wage, social security discount, Medicare discount, amount of state taxes and savings of retirement.Calculate the gross salary of each employee.Calculate the amount withholding from Social Security and Medicare.Calculate the net pay for each employee.Jornalize the entry to record the payroll.The New Pharmacy pays for overtime hours and a half. It does not pay overtime to employees who are paid by salary. The company has 10 employees and the information on the hours worked is as follows: Employee Name Hours worked Hourly wage Weekly salary Payment of retirement Union Payment Juan del Pueblo 43 $8.50 $21.93 $15 Ramonita Ramírez 41 11.50 $37.12 Managerial, does not pay fee. Brenda Montalvo 55 $1,100 $88.00 Managerial, does not pay fee. Camilo Monge 40 7.25 $23.02 15 Jorge Emmanueli 46…arrow_forward
- St. Joseph's Hospital began operations In December 2019 and had patient service revenues totaling $980,000 (based on customary rates) for the month. Of this, $122,000 is billed to patients, representing their Insurance deductibles and copayments. The balance is billed to third-party payors, including Insurance companies and government health care agencies. St. Joseph's estimates that 20 percent of these third-party payor charges will be deducted by contractual adjustment. The hospital's fiscal year ends on December 31. Required: 1. Prepare the journal entries for December 2019. Assume 15 percent of the amounts billed to patients will be reduced through implicit price adjustments. 2. Prepare the journal entries for 2020 assuming the following: a. $102,000 is collected from the patients during the year and $9,800 of price adjustments are granted to Individuals. b. Actual contractual adjustments total $186,000. The remaining receivable from third-party payors is collected. (If no entry is…arrow_forwardPortia Grant is an employee who is paid monthly. For the month of January of the current year, she earned a total of $9,088. The FICA tax for social security is 6.2% of the first $128,400 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The FUTA tax rate of 0.6% and the SUTA tax rate of 5.4% are applied to the first $7,000 of an employee's pay. The amount of federal income tax withheld from her earnings was $1,507.97. What is the total amount of taxes withheld from the Portia's earnings? (Round your intermediate calculations to two decimal places.)arrow_forwardOn Aug 29, Sindhu received an invoice for $85.49, dated Aug 27. If the terms of the invoice are 4/10, 2/20, n/60, what amount is required on Sep 15 to pay the invoice in full?arrow_forward
- Portia Grant is an employee who is paid monthly. For the month of January of the current year, she earned a total of $8,260. The FICA tax for social security is 6.2% of the first $132,900 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The FUTA tax rate of 0.6% and the SUTA tax rate of 5.4% are applied to the first $7,000 of an employee's pay. The amount of federal income tax withheld from her earnings was $1,325.17. What is the total amount of taxes withheld from the Portia's earnings?arrow_forwardGeraldine Wolfe is a supervisor at Fantastigifts. She has an annual salary of $49,000, paid biweekly, and a garnishment for consumer credit of $470. Assuming that her disposable income is 80 percent of her gross pay per period, does the garnishment follow the CCPA? If not, what is the maximum garnishment allowed for Geraldine’s consumer credit garnishment? (Round your intermediate calculations and final answer to 2 decimal places.) Does the garnishment follows the CCPA Maximum garnishment allowedarrow_forwardDan Dietrich is an executive with Coronado Distributors. His gross earnings are $17,300 per month. a. What are the withholdings for social security and Medicare for Dan’s January paycheck? b. In what month will his salary reach the social security wage base limit? c. What are the social security and Medicare tax withholdings for Dan in the month named in part b?arrow_forward
- Portia Grant is an employee who is paid monthly. For the month of January of the current year, she earned a total of 8,738. The FICA tax for social security is 6.2% of the first $128,400 of employee earnings each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The FUTA tax rate of 0.6% and the SUTA tax rate of 5.4% are applied to the first $7,000 of an employee's pay. The amount of federal income tax withheld from her earnings was $1,449.87. Her net pay for the month is:arrow_forwardCarol is a salesperson paid solely by commission and is paid monthly. In September, Carol earned a total of $7,500.00 in commissions and received a mid-month advance of $2,000.00. What amount would be used at the end of September to calculate statutory deductions?arrow_forwardPortia Grant is an employee who is paid monthly. For the month of January of the current year, she earned a total of 9,038. The FICA tax for social security is 6.2% of the first $132,900 of employee earnings each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The FUTA tax rate of 0.6% and the SUTA tax rate of 5.4% are applied to the first $7,000 of an employee's pay. The amount of federal income tax withheld from her earnings was $1,499.67. Her net pay for the month is: (Round your intermediate calculations to two decimal places.)arrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning