Management for Clinicians
Financial Management Assignment 2019
Important: You must show all calculations and explain how you got all your answers. For example, suppose a question asks what the profit will be in a particular month and you put "$50,000". Even if this is correct you will receive no marks if you do not show how you got the answer. There is no need for footnotes or references unless quote from a reference. It is essential that the work is your own.
Please do NOT include the question as part of your assignment. It is not necessary and all it does is increase your Turnitin similarity index. Just put your answers in your assignment response.
Question 1 (15 Marks)
The Adelaide Hospital provides a range of health care services and the following transactions took place between March and June:
March 1 – paid rent in advance for the months of March, April, May and June - $16,000
March 5 - Patients receive health care services of $60,000
March 10 – Patients receive health care services of $250,000 on terms of net 30 days.
March 15 - Patients pay $60,000 for health care services received on March 5.
March 30 - hospital pays $50,000 for salaries for work done in March
April 1 -The hospital purchases drugs for $160,000 on terms of net 30 days. In April the hospital uses $35,000 worth of drugs. In May $65,000 of drugs are used and in June $60,000 of drugs are used.
April 6 - Patients receive health care services of $250,000 on terms of net 30 days.
April 7 – phone bill received for $1,000 for telephone services in March.
April 10 – Patients pay $250,000 for services received in March.
April 30 - Hospital pays $55,000 for salaries for work done in April
May 1 – Hospital pays phone bill for $1,000 received on April 7.
May 5 - The hospital pays $160,000 for drugs received in April.
May 6 - Patients pay $250,000 for services received in April.
May 15 – Patients receive health services of $200,000 on terms of net 30 days.
May 30 - Hospital pays $45,000 for salaries for work done in May.
June 5 - Patients receive $55,000 in services and pay for them on the same day.
June 28 – Pays rent of $16,000 in advance for the months of July, August, September and October. June 29 – Patients pay $200,000 for services received in May.
June 30 - Hospital pays $40,000 for salaries for work done in June.
a) Calculate this Hospital's profit or loss for each of the months of March, April and May on both a cash accounting and accrual accounting basis. Make sure you show your calculations. You need to do a separate profit and loss statement for each month. Explain why these calculations are different. (6 marks)
b) What month was the most profitable for the hospital? Explain your answer. If the hospital had $45,000 in its bank account on March 1, how much would it have in the bank on 30 June? (3 marks)
c) Calculate the Hospital’s profit or loss for the four months ending June on both a cash accounting and accrual accounting basis. If you get the same answer for both methods explain why this is so. If you get a different answer for the cash and accrual methods explain why this happened. (3 marks)
d) As a manager of a healthcare facility what financial figures would you find the most useful – those done on a cash basis or those done on an accrual basis? Explain your answer. (3 marks)
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