Ask Question
5 May, 14:12

A hospital arranges with a third-party payer to charge the third party 75 percent of its established billing rates. During January 2018, the hospital provided services amounting to $1 million at the established billing rates. Prepare journal entries to record the January billings.

+1
Answers (1)
  1. 5 May, 14:36
    0
    Debit Cash account or Accounts receivables $750,000

    Credit Service revenue $750,000

    Being entries to recognize revenue earned and billed to the third party at agreed percentage of established billing rate.

    Explanation:

    When services are rendered and cash is yet to be collected, the revenue earned is recognized by a debit to accounts receivable and a credit to service revenue accounts.

    On collection of cash, credit accounts receivables and debit cash account.

    At an established billing rate of $1 million, if the hospital will charge 75%,

    revenue to be recognized

    = 75% of $1 million = $750,000

    Entries required on billing

    Debit Cash account or Accounts receivables $750,000

    Credit Service revenue $750,000

    Being entries to recognize revenue earned and billed to the third party at agreed percentage of established billing rate.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “A hospital arranges with a third-party payer to charge the third party 75 percent of its established billing rates. During January 2018, ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers