FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Under Lennon Hospital’s rate structure, it earned patient service revenue of $9 million for the year ended December 31, 2017. However, Lennon did not expect to collect this entire amount because it deemed $1.4 million to be charity care and estimated contractual adjustments to be $800,000.

During 2017, Lennon purchased medical supplies from Harrison Medical Supply Company at a cost of $4,000. Harrison notified Lennon that it was donating the supplies to the hospital.

Lennon is a private not-for-profit entity. How much should Lennon record as patient service revenue and how much as net patient service revenue? How should Lennon record the donation of the supplies?

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