Chapter 3 Accrual Accounting Concepts 103
Transaction g. Provided services of $6,100 to patients on account.This transaction is
similar to the revenue transactions that we recorded in September and October, except
that the services have been provided on account. Family Health Care will collect cash
from the patients’ insurance companies in the future. Such amounts that are to be col-
lected in the future and that arise from the normal operations of a business are called
accounts receivable. Since a valid claim exists for future collection, accounts receivable
are assets, and the transaction would be recorded as shown below.
Balance Sheet
Assets Liabilities Stockholders’ Equity
Accts. Prepaid Office Notes Accts. Unearned Capital Retained
Cash Rec. Insur.Supp.Equip.LandPay.Pay.RevenueStockEarnings
4,020 8 ,400 240 8 ,500 12,000 16, 800 240 1, 800 11,000 3,320
6,100 6,100
4,020 6,100 8 ,400 240 8 ,500 12,000 16, 800 240 1, 800 11,000 9,420
Statement of Cash Flows
Statement of
Cash Flows
Income
Statement
Income Statement
g. 6,100 Fees earned
Balances
g. Fees earned on acct.
Balances
g.
Balance Sheet
Assets Liabilities Stockholders’ Equity
Accts. Prepaid Office Notes Accts. Unearned Capital Retained
Cash Rec. Insur.Supp.Equip.LandPay.Pay.RevenueStockEarnings
4,020 6,100 8 ,400 240 8 ,500 12,000 16, 800 240 1, 800 11,000 9,420
5,500 5,500
9,520 6,100 8 ,400 240 8 ,500 12,000 16, 800 240 1, 800 11,000 14,920
Statement of Cash Flows
h. Operating 5,500
Statement of
Cash Flows
Income
Statement
Income Statement
h. 5,500 Fees earned
Balances
h. Fees earned for cash
Balances
h.
Transaction h. Received $5,500 for services provided to patients who paid cash.This
transaction is similar to the revenue transactions that we recorded in September and
October and is recorded as shown below.
Transaction i. Received $4,200 from insurance companies, which paid on patients’ ac-
counts for services that have been provided.In this transaction, cash is increased and the
accounts receivable is decreased by $4,200. Thus, only the mix of assets changes, and
the transaction is recorded as shown below.
Balance Sheet
Assets Liabilities Stockholders’ Equity
Accts. Prepaid Office Notes Accts. Unearned Capital Retained
Cash Rec. Insur.Supp.Equip.LandPay.Pay.RevenueStockEarnings
9,520 6,100 8 ,400 240 8 ,500 12,000 16, 800 240 1, 800 11,000 14,920
4,200 4,200
13,720 1,900 8 ,400 240 8 ,500 12,000 16, 800 240 1, 800 11,000 14,920
Statement of Cash Flows
i. Operating 4,200
Statement of
Cash Flows
Income
Statement
Income Statement
Balances
i. Collected cash on acct.
Balances