HLTH 5040 Healthcare Finance Health Care Finance Prepare a B

HLTH 5040 Healthcare Finance

Health Care Finance Prepare a Balance Sheet and Income Statement, in proper form, for XYC Corp (All Activity takes place within a one month period) Corporation receives $1,000,000 from founding investors. 1) XYC Corp. purchases a building for $750,000 and uses long term debt to finance. 2) XYC purchases equipment for $100,000 and finances with a note payable. 3) XYC bills patients for $150,000 for services rendered. 4) XYC purchases $150,000 of supplies on trade credit. 5) XYC issues payroll for last week: $50,000 6) XYC collects $75,000 of the amount billed under #3 above. 7) XYC pays for $50,000 of the supplies purchased above on trade credit. 8) At the end of the month XYC owes their employees $35,000 of wages. 9) XYC uses $25,000 of the supplies purchased above. 10) XYC ends the month with $125,000 of charges incurred, but not yet billed. 11) The building is depreciated straightline over a 30 year period. 12) The Ultrasound equipment is depreciated straighline over 5 years. 13) The note payable has an interest rate of 6% and the long term debt has an interest rate of 12%. No interest is actually paid, but it is accrued on the books at month end. 14) XYC pays a $5,000 dividend to the shareholders

Solution

INCOME STATEMENT Service revenue 275000 Salaries and Wages expenses 85000 Supplies expense 25000 Depreciation expense-Buildings 2083 Depreciation expense-Equipment 1667 Interest expense (100000*0.5%+750000*1%) 8000 121750 Net income 153250 BALANCE SHEET ASSETS Current Assets: Cash 970000 Accounts receivable 200000 Supplies 125000 1295000 Non-Current Assets: Building 750000 Accumulated depreciation-Buildings (750000/360) 2083 747917 Equipment 100000 Accumulated depreciation-Equipment (100000/60) 1667 98333 Total assets 2141250 TOTAL LIABILITIES AND EQUITY Current liabilities: Accounts payable 100000 Salaries and wages payable 35000 Interest expense 8000 Note payable 100000 243000 Long term debt 750000 Total liabilities 993000 Owners\' Equity: Owners\' Capital 1000000 Retained earnings 148250 1148250 Total liabilities and owners\' equity 2141250