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36.     (Journal entries for patient service revenues; computation of net patient service revenue)

Prepare journal entries to account for the following transactions for Vicki Hospital. Also, compute the net service revenue to be reported in the Hospital's statement of operations.
          a.     Vicki provided services to patients during the year, billing a total of $59,500,000 at its established rates.
          b.     Included in the services provided in transaction a. were the following: (1) charity cases amounting to $2,100,000; and (2) adjustments amounting to $17,500,000 for differences between established billing rates and amounts allowed by third-party payers under prospective billing arrangements.
          c.     Vicki collected $36,000,000 from direct-pay and third-party payers.
          d.     Vicki established an allowance for bad debts in an amount equal to 10% of the accounts receivable outstanding after considering the effects of transactions a., b., and c., above.
          e.     The accounts of patients who owed $33,000 were written off as uncollectible.
          f.     At year-end, Vicki analyzed the costs incurred under its arrangements with a third-party payer, and estimated that it would need to refund $250,000 to that third-party after submission and audit of its cost report to the third party.

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