Non-Profit Accounting

Non-Profit Accounting

Question # 1 - a

Brookstone OB/GYN Association

Operating Statement (Accrual Basis)

($000)'

 

Actual Jun-01

Jul-01

Aug-01

Sep-01

Oct-01

Nov-01

Dec-01

Revenue

Professional Services

748.8

763.776

779.052

794.633

810.525

826.736

843.27

less Allowances for bad debt

149.8

152.755

155.81

158.927

162.105

165.347

168.654

Net Revenues

599

611.021

623.241

635.706

648.42

661.389

674.616

Expenses

Physicians Payment

130.6

141.6

141.6

141.6

141.6

141.6

141.6

Administrative Salaries

73.9

73.9

73.9

73.9

73.9

73.9

73.9

Benefits

33.5

35.71

35.71

35.71

35.71

35.71

35.71

Medical supplies

11.2

11.4566

11.6858

11.9195

12.1579

12.401

12.6491

Rent & Utilities

43.6

43.6

43.6

43.6

43.6

43.6

43.6

Billing/Collection fee

59.9

61.1021

62.3241

63.5706

64.842

66.1389

67.4616

Equipment depreciation

2.4

2.6

2.6

2.6

2.9

2.9

2.9

Office Expenses

5

5

5

5

5

5

5

Liability Insurance

112.3

114.566

116.858

119.195

121.579

124.01

126.491

Contracted Services

10.6

10.6

10.6

10.6

10.6

10.6

10.6

Other

4.5

4.5

4.5

4.5

4.5

4.5

4.5

Contribution to Dean

65.9

67.2123

68.5565

69.9277

71.3262

72.7527

74.2078

Total Expenses

553.4

571.847

576.934

582.123

587.715

593.113

598.619

Surplus/(Deficit)

45.6

39.1734

46.3071

53.5834

60.7053

68.2756

75.9973

Question # 1 - b

Brookstone OB/GYN Association

Operating Statement (Accrual Basis)

($000)'

 

Actual Jun-01

Jul-01

Aug-01

Sep-01

Oct-01

Nov-01

Dec-01

Assets

Cash

0

0

0

0

0

0

0

Account receivable (net)

2279.5

2337.44

2396.84

2457.76

2520.23

2584.28

2649.97

Medical supply inventory

170

173

176

179

182

185

188

Prepaid Insurance

340

340

340

340

340

340

340

Total current assets

2789.5

2850.44

2912.84

2976.76

3042.23

3109.28

3177.97

Equipment (net)

1306.8

1304.2

1301.6

1329

1326.1

1323.2

1320.3

Total assets

4096.3

4154.64

4214.44

4305.76

4368.33

4432.48

4498.27

Liabilities and Equity

Bank loan

218.8

738.962

682.185

618.237

576.981

498.28

411.993

Account payable

84.4

86.088

87.8098

89.566

91.3573

93.1844

95.0481

Payable to dean

179.4

246.612

315.169

385.096

456.423

529.175

603.383

Total current liabilities

482.6

1071.66

1085.16

1092.9

1124.76

1120.64

1110.42

Note Payable

570

 

 

30

 

 

 

Fund balance

 

 

 

 

 

 

 

start-up contribution

1000

1000

1000

1000

1000

1000

1000

Retained surpluses

2043.8

2082.97

2129.28

2182.86

2243.57

2311.84

2387.84

Total liabilities + Fund balance

4096.4

4154.64

4214.44

4305.76

4368.33

4432.48

4498.27

Question # 1 - c

Brookstone OB/GYN Association

Operating Statement (Accrual Basis)

($000)'

Total line of credit

300.00

Line of Credit till June

219.00

Expected line of Credit till December

3,526.64

Expected total line of credit

3,745.64

Expected required amount of line of credit

(3,445.64)

Question #2 - a

Threatening Cash Position

There was problem in available cash position. The cash collection on accounts receivable used to take around five months. This causes a serious problem in making cash available. On the other, the company was supposed to make payment against purchases in thirty days to the supplier. Therefore, the account payable is expected to rise in coming months. Moreover, the revenues were expected to grow which means that the consumption of supplies would also be increased (Ramanathan, et.al 1982).

Question #2 - b

Strategies

The company should ask their supplier to give relax in collection policy. This will give company a room to cover the cash shortage by holding cash for longer period of time on hand. Company need to adopt a strict strategy in collection of cash against accounts receivables. The company can ask its customer to pay within redefined term of credit (Ramanathan, et.al 1982).

Question # 3

It is obvious from the case that company is having problems in collection of receivables. This creates liquidity problem for the company. Company encounters this issue because it needs to borrow more money from the bank. It is because of two main reasons which are ...