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)
- Mrs. Garcia came to the Obstetrics Department of Monroe Health System pregnant and ready to deliver her first baby. She has health insurance coverage with United Healthcare provided by her employer. United has a contract with Monroe Health System, that gives United Healthcare a 20% discount from Monroe's full established rates. If Monroe Health System's rate for normal newborn delivery, including mother and baby, is $5,700, what is the amount of the contractual allowance that must be recorded related to the delivery of Mrs. Garcia's baby? A. $1,140.00 B.$1,410.00 C. $3,850.00 D.$4,560.00 E.$6,840.00arrow_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
- An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or grandparent for a child at the child's birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company: $910 First birthday: Second birthday: $ 910 Third birthday: $ 1,010 Fourth birthday: $ 1,010 Fifth birthday: $ 1,110 $ 1,110 Sixth birthday: After the child's sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $420,000. If the relevant interest rate is 11 percent for the first six years and 7 percent for all subsequent years, what is the value of the policy at the child's 65th birthday? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) > Answer is complete but not entirely correct. Child's 65th birthday $ 367,778.00 Xarrow_forwardSt. 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_forward
- A patient's insurance policy states: Annual deductible: $300.00 Coinsurance: 70-30 This year the patient has made payments totaling $533 to all providers. Today the patient has an office visit (fee: $80). The patient presents a credit card for payment of today's bit. What is the amount that the patient should pay?arrow_forwardPortia 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_forwardRichard Gaziano is a manager for Health Care, Incorporated. Health Care deducts Social Security, Medicare, and FIT (by percentage method) from his earnings. Assume a rate of 6.2% on $142, 800 for Social Security and 1.45% for Medicare. Before this payroll, Richard is $1,000 below the maximum level for Social Security earnings. Richard is married, filing jointly and is paid weekly. What is Richard's net pay for the week if he earns $1,750? (Use Table 9.1).arrow_forward
- Richard Gaziano is a manager for Health Care, Incorporated. Health Care deducts Social Security, Medicare, and FIT (by percentage method) from his earnings. Assume a rate of 6.2% on $142,800 for Social Security and 1.45% for Medicare. Before this payroll, Richard is $1,000 below the maximum level for Social Security earnings. Richard is married, filing jointly and is paid weekly. What is Richard's net pay for the week if he earns $1,500? Note: Round your answer to the nearest cent. * Answer is complete but not entirely correct. Net pay $ 1,576.50 Xarrow_forwardKalen O’Brien earned $730 this week. The deductions from her pay were as follows:FIT FICA—OASDI FICA—HI State income tax State disability insurance Health insurance premium Credit union contribution United Fund contribution$72.00 45.26 10.59 36.508.61 19.50 35.005.00O’Brien’s employer just received a garnishment order (credit card debt of $3,500) against her pay. Compute the following:a. O’Brien’s disposable earnings........................................... b. Theamountofherpaysubjecttothegarnishmentarrow_forwardAssume that services during the year included these three patients: Mrs. Marple, a Medicare patient whose stay at Reston Hospital (one of HCA’s owned hospitals) was for 7 days and who received services which HCA assigned in retail charges (otherwise termed gross revenue) of $25,000. The Medicare DRG payment for her case is expected tobe $10,000; Mr. Chan, a patient with little income or assets and one whom the hospital classifies as a charity patient, stayed in the hospital 4 days and received services with gross charges amounting to $18,000; Mr. Friday stayed in the hospital for 3 days and received services with gross charges amounting to $28,000. Although Mr. Friday had no insurance, he did have a significant source of income and had a sizable amount of assets. Attempts by the hospital to locate Mr. Friday to settle his bill have proven fruitless, and currently he has moved and has left no forwarding address. Assume that at the end of the period the status of the bills for the…arrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning