The following events were recorded on the books of Mercy Hospital for the year ended December 31, 2008

CH19 - Problem 1 -- Statement of Activities—Hospital

The following events were recorded on the books of Mercy Hospital for the year ended December 31, 2008.


1. Revenue from patient services totaled $16,000,000. The allowance for uncollectibles was established at $3,400,000. Of the $16,000,000 revenue, $6,000,000 was recognized under cost reimbursement agreements. This revenue is subject to audit and retroactive adjustment by third-party payers (estimated adjustments are included in the allowance account).

2. Patient service revenue is accounted for at established rates on the accrual basis.

3. Other operating revenue totaled $346,000, of which $160,000 was from specific purpose funds.

4. Mercy received $410,000 in unrestricted gifts and bequests. They are recorded at fair market value when received.

5. Endowment funds earned $160,000 in unrestricted income.

6. Board designated funds earned $82,000 in income.

7. Mercy’s operating expenses for the year amounted to $13,370,000. This included $500,000 in straight-line depreciation.

Prepare a statement of activities for Mercy Hospital for the year ended December 31, 2008.

Click here for the solution: The following events were recorded on the books of Mercy Hospital for the year ended December 31, 2008