On the spreadsheet, it is the Integrative I problem.
Amounts billed are recorded in the Billings Receivable account. Insurance companies, states, and federal government do not fully fund all procedures. Mountain Home Health has already removed the uncollectible amounts from the Billings Receivable account and reports it and Medical Services Revenue at the net amount. Services provided but not yet recorded totaled $16,000, net of allowances for the uncollectible amounts. The firm earns a minor portion of its total revenue directly from patients in the form of cash.
Employee salaries, medical supplies, depreciation, and gasoline are the major expenses. Employees are paid every Friday for work performed during the Saturday to Friday pay period. Salaries amount to $800 per day. In 2003, December 31 falls on a Wednesday. Medical supplies (average use of $1500 per week) are purchased periodically to support health care coverage. The inventory of supplies on hand on December 31 amounted to $8653.
The firm owns 5 automobiles (all purchased at the same time) that average 50,000 miles per year and are replaced every 3 years. They typically have no residual value. The building has an expected life of 20 years with no residual value. Straight-line depreciation is used on all firm assests. Gasoline costs, which are a cash expenditure, average $375 per day. The firm purchases a 3 year, extended warranty contract to cover maintenance costs. The contract costs $9000 (assume equal use each year).
On December 29, 2003, Mountain Home Health declared a dividend of $10,000, payable on January 15, 2004. The firm makes annual payments of principal and interest each June 30 on the mortgage. The interest rate on the mortgage is 6%.
In an Excel spreadsheet format, the amounts from the trial balance are posted to T-accounts and then a balance sheet and income statement.