Use an organization’s financial information to create financial statements (balance sheet, statement of operations, and statement of changes in net assets).
Using the financial information provided for Sharpe Medical Center in the table, provide
a completed statement of operations,
a statement of changes in net assets, and
a balance sheet.
To conclude this assignment, you must also
analyze the organization’s financial position using the information contained within the financial statements that you composed, and
create a summary of the organization’s financial strength based on the financial statements.
Your submission should be at least three pages, not counting the title or reference page. At a minimum, you must cite your eTextbook, but you may use other outside sources as well. Adhere to APA Style when constructing this assignment, including in-text citations and references for all sources that are used. Please note that no abstract is needed.
- Multiple statements. The following are account balances (in thousands) at September 30, 20X1, for Sharpe Medical Center. Prepare (a) a balance sheet, (b) a statement of operations, and (c) a statement of changes in net assets for September 30, 20X1.
Givens (in ’000s)
Inventory $5,000
Patient revenue (net of contractuals) $402,000
Gross plant, property, and equipment $450,000
Net accounts receivable $95,000
Ending balance, net assets with donor restrictions $24,000
Wages payable $8,600
Long‐term debt $320,000
Supply expense $44,000
Net assets released from donor restriction $9,000
Depreciation expense $54,000
General expense $100,000
Bad debt expense $6,500
Cash and cash equivalents $58,000
Transfer to parent corporation ($7,900)
Beginning balance, net assets without donor restrictions $250,000
Accounts payable $16,000
Beginning balance, net assets with donor restrictions $33,000
Interest expense $4,000
Labor expense $180,000
Accumulated depreciation $70,000
Long‐term investments $95,200
Ending balance, net assets without donor restrictions $264,600
Full Answer Section
| Net Assets With Donor Restrictions: |
|
| Beginning balance |
$33,000 |
| Net assets released from donor restrictions |
($9,000) |
| Ending balance |
$24,000 |
| Total Net Assets |
$288,600 |
Sharpe Medical Center
Balance Sheet
September 30, 20X1
Assets:
| Cash and cash equivalents |
$58,000 |
| Net accounts receivable |
$95,000 |
| Inventory |
$5,000 |
| Total Current Assets |
$158,000 |
| Non-current Assets: |
|
| Long-term investments |
$95,200 |
| Gross plant, property, and equipment |
$450,000 |
| Less: Accumulated depreciation |
($70,000) |
| Total Non-current Assets |
$475,200 |
| Total Assets |
$633,200 |
Liabilities and Net Assets:
| Accounts payable |
$16,000 |
| Wages payable |
$8,600 |
| Total Current Liabilities |
$24,600 |
| Non-current Liabilities: |
|
| Long-term debt |
$320,000 |
| Total Non-current Liabilities |
$320,000 |
| Total Liabilities |
$344,600 |
| Net Assets: |
|
| Net assets without donor restrictions |
$264,600 |
| Net assets with donor restrictions |
$24,000 |
| Total Net Assets |
$288,600 |
| Total Liabilities and Net Assets |
$633,200 |
Analysis of Financial Position:
Sharpe Medical Center demonstrates a generally strong financial position. The organization's current assets exceed its current liabilities, indicating a healthy liquidity position. The high level of cash and cash equivalents suggests a strong ability to meet short-term obligations. The sizable long-term investments also point towards a solid financial foundation.
However, the substantial long-term debt requires further investigation. The organization should closely monitor its debt-to-asset ratio and ensure its long-term debt does not become an undue burden. Additionally, a further analysis of the transfer to the parent corporation could be beneficial to understand the nature and implications of this transaction.
Summary of Financial Strength:
Sharpe Medical Center appears financially stable with a positive operating income, healthy liquidity, and substantial assets. The presence of a large debt burden requires attention and monitoring. Overall, the organization demonstrates a strong financial foundation with potential for continued growth.