Problem
Refer to the Metropolis Health System (MHS) balance sheet and statement of revenue and expense in the MHS Case Study appearing in Chapter 33. Patient accounts receivable of $7,400,000 is shown as net of $1,300,000 allowance for bad debts (8,700,000 - 1,300,000 = 7,400,000).
i. What percentage of gross accounts receivable is the allowance for bad debts?
ii. If the allowance for bad debts is raised to $1,500,000, where does the extra $200,000 go?