Advanced Accounting 12th Edition by Joe Ben Hoyle,Thomas Schaefer , Timothy Doupnik

Exercise 62

A private not-for-profit health care entity provides its patients with services that would normally be charged at $1 million. However, it estimates a $200,000 reduction because of contractual adjustments. It expects another $100,000 reduction because of bad debts. Finally, the organization does not expect to collect $400,000 because this amount is deemed to be charity care. Which of the following is correct
A) Patient service revenues = $1 million; net patient service revenues = $300,000.
B) Patient service revenues = $1 million; net patient service revenues = $400,000.
C) Patient service revenues = $600,000; net patient service revenues = $300,000.
D) Patient service revenues = $600,000, net patient service revenues = $400,000.