Question

Accounting for Hospitals & Other Health Care Providers. (b)The Hospital billed patients $2,350,000 for services rendered. Of this amount, 7% is expected to be uncollectible. Is the DEBT for the 7%=$164,500 to Provision for Uncollectible Accounts OR Operating Expense-General-Bad Debt Expense? I know the CR goes to Allowance for Patient Accounts Receivable. Thank you.

Answer 1

The debit for this transaction would go to Bad Debt Expense Account. Since non receipt of accounts receivable is to be recognised as an expenses , hence the proper Account for the same would be Bad Debt Expense Account.

Operating Expense account is not a proper accounts title for recording any expense. Also since there is specific account title by Bad Debt Expense Account, hence operating expense account will not be used.

Provision for Uncollectible Accounts is also wrong description to record expenses.