Answer:
Debit Cash account or Accounts receivables $750,000
Credit Service revenue $750,000
Being entries to recognize revenue earned and billed to the third party at agreed percentage of established billing rate.
Explanation:
When services are rendered and cash is yet to be collected, the revenue earned is recognized by a debit to accounts receivable and a credit to service revenue accounts.
On collection of cash, credit accounts receivables and debit cash account.
At an established billing rate of $1 million, if the hospital will charge 75% ,
revenue to be recognized
= 75% of $1 million = $750,000
Entries required on billing
Debit Cash account or Accounts receivables $750,000
Credit Service revenue $750,000
Being entries to recognize revenue earned and billed to the third party at agreed percentage of established billing rate.
