Problems
3.1 Entries for the Warren Clinic 2015 income statement are listed below
in alphabetical order. Reorder the data in proper format.
Depreciation expense $90,000
General/administrative
70,000
expenses
Interest expense 20,000
Investment income 40,000
Net income 30,000
Net operating revenues 410,000
Other revenue 10,000
Patient service revenue 440,000
Provision for bad debts 40,000
Purchased clinic services 90,000
Salaries and benefits 150,000
Total expenses 460,000
Reordering the data in proper format:
Item Amount
, Net operating revenues $410,000
Patient service revenue $440,000
Other revenue $10,000
Investment income $40,000
General/administrative
$70,000
expenses
Salaries and benefits $150,000
Depreciation expense $90,000
Purchased clinic services $90,000
Interest expense $20,000
Provision for bad debts $40,000
Total expenses $460,000
Net income $30,000
3.3 Consider this income statement:
Green Valley Nursing Home, Inc.
Statement of Income Revenue:
Year Ended December 31, 2015
Patient service revenue $3,163,258
Less provision for bad debts (110,000)
Net patient service revenue $3,053,258
, Other revenue 106,146
Net operating revenues $3,159,404
Expenses:
Salaries and benefits $1,515,438
Medical supplies and drugs 966,781
Insurance and other 296,357
Depreciation 85,000
Interest 206,780
Total expenses $3,070,356
Operating income $89,048
Provision for income taxes 31,167
Net income $ 57,881
a. How does this income statement differ from the ones presented in Exhibit 3.1 and Problem 3.2?
Unlike the other two income statements, the Green Valley Nursing Home's income statement include an income ta
b. Why does Green Valley show a provision for income taxes while the other two income statemen
The reason why Green Valley has an income tax provision is probably because it is a for-profit company that is lia
c. What is Green Valley's total profit margin? How does this value compare with the values for Su
Profit margin = net income/total revenues
= $ 57,881/$3,159,404
0.0183
The before-tax profit margin for Green Valley is operating income divided by total revenues. Calculate Green Val
The operating income divided by the total revenues would be the before-tax profit margin for Green Valley.
4.3 Here is financial statement information on four not-for-profit clinics:
Pittman Rose Beckman Jaffe
December 31, 2014:
Assets $80,000 $100,000 g $150,000
Liabilities 50,000 d $75,000 j
Equity a 60,000 45,000 90,000
Assets
December 31, 2015:
Assets b 130,000 180,000 k
Liabilities 55,000 62,000 h 80,000
Equity 45,000 e 110,000 145,000
3.1 Entries for the Warren Clinic 2015 income statement are listed below
in alphabetical order. Reorder the data in proper format.
Depreciation expense $90,000
General/administrative
70,000
expenses
Interest expense 20,000
Investment income 40,000
Net income 30,000
Net operating revenues 410,000
Other revenue 10,000
Patient service revenue 440,000
Provision for bad debts 40,000
Purchased clinic services 90,000
Salaries and benefits 150,000
Total expenses 460,000
Reordering the data in proper format:
Item Amount
, Net operating revenues $410,000
Patient service revenue $440,000
Other revenue $10,000
Investment income $40,000
General/administrative
$70,000
expenses
Salaries and benefits $150,000
Depreciation expense $90,000
Purchased clinic services $90,000
Interest expense $20,000
Provision for bad debts $40,000
Total expenses $460,000
Net income $30,000
3.3 Consider this income statement:
Green Valley Nursing Home, Inc.
Statement of Income Revenue:
Year Ended December 31, 2015
Patient service revenue $3,163,258
Less provision for bad debts (110,000)
Net patient service revenue $3,053,258
, Other revenue 106,146
Net operating revenues $3,159,404
Expenses:
Salaries and benefits $1,515,438
Medical supplies and drugs 966,781
Insurance and other 296,357
Depreciation 85,000
Interest 206,780
Total expenses $3,070,356
Operating income $89,048
Provision for income taxes 31,167
Net income $ 57,881
a. How does this income statement differ from the ones presented in Exhibit 3.1 and Problem 3.2?
Unlike the other two income statements, the Green Valley Nursing Home's income statement include an income ta
b. Why does Green Valley show a provision for income taxes while the other two income statemen
The reason why Green Valley has an income tax provision is probably because it is a for-profit company that is lia
c. What is Green Valley's total profit margin? How does this value compare with the values for Su
Profit margin = net income/total revenues
= $ 57,881/$3,159,404
0.0183
The before-tax profit margin for Green Valley is operating income divided by total revenues. Calculate Green Val
The operating income divided by the total revenues would be the before-tax profit margin for Green Valley.
4.3 Here is financial statement information on four not-for-profit clinics:
Pittman Rose Beckman Jaffe
December 31, 2014:
Assets $80,000 $100,000 g $150,000
Liabilities 50,000 d $75,000 j
Equity a 60,000 45,000 90,000
Assets
December 31, 2015:
Assets b 130,000 180,000 k
Liabilities 55,000 62,000 h 80,000
Equity 45,000 e 110,000 145,000
