USA Unreturned Fixed Assets

[Hector]

Small Healthcare Care Company- In short we lend patients meters (Fixed Assets to the company) they test we bill insurance companies for monitoring patients. We are attempting to bill patients when they go off our service and refuse to the return the meters. We are trying to either get the meter back or have them pay $1,000. Problem is it’s now the next quarter and the books are closed for last quarter when we booked the first entry.

Can someone let me know if this is right? Sorry for the long post

1st entry when we bill.

Debit Credit
Patient Receivable (BS) $ 1,000.00 / Meter Sales (P&L) $ 1,000.00

3 likely scenarios

**If we Receive The Meter Back- Do we Simply Reverse the first entry? This however makes my P&L decrease the next qtr!!

Debit Credit
Meter Sales $ 1,000/Patient Receivable $ 1,000 ***reverseing original holding receivable

**If we receive the cash- Two Entry's Req

Debit Credit
Meter Sales $ 1,000/Patient Receivable $ 1,000 ***reverseing original holding receivable

Debit Credit
Accum Depreciation $ 100/ Fixed Asset $ 541
Cash $ 1000/ Gain on sale of fixed assets $ 559

** If we Don’t Get it Back After 120 Days

Debit Credit
Allowance For Doubtful Accounts $ 1,000/Patient Receivable $ 1,000

Debit Credit
Fixed Asset $ 541/ Accum Depreciation $ 100 Loss on Disposal of fixed asset $ 441

Debit Credit
Bad Debt expense $1,000 / Allowance For Doubtful Accounts $1,000


PS- How I love my job

 

[ArcSine]

Take this with a grain of salt since I'm not seeing all the underlying details, but it seems from your info that a sale hasn't occurred until the patient chooses to keep the device and remit $1,000. Until that time the meter just remains as a fixed asset on your books.

Under this approach there's no JE when you first send out a bill as the patient comes off the service. The bill is in effect a notice that the patient may purchase the device for $1,000; otherwise they must return it.

If they send the $1,000 then you book a sale, with a debit to Cash and a credit to Sales. Along with that you'd make the appropriate entries to Fixed Assets, Acc Deprec'n, and Gain on Sale.

If they return the meter, no entry is made, as the asset never left your Fixed Assets accounts.

If they keep the meter but don't pay, then you book your loss (after making reasonable efforts to collect, of course).