Entries For The Warren Clinic 2008 Income Statement List

Entries For The Warren Clinic 2008 Income Statement Are Listed Be

Reorder the given data for the Warren Clinic 2008 income statement in the proper format with clear classification of revenues and expenses, and include a calculation and analysis of the net income based on the provided entries.

Sample Paper For Above instruction

Introduction

The accurate preparation of an income statement is vital for understanding an organization’s financial health. It summarizes revenues earned and expenses incurred during a specific period, ultimately leading to net income or loss. This paper will analyze the provided entries for the Warren Clinic’s 2008 income statement, reorganizing the data into a proper format and providing context around its components and financial implications.

Reorganized Income Statement

Based on the provided entries, the proper format is as follows:

Revenues:

• Patient service revenue: $440,000
• Other revenue: $10,000
• Interest income: $40,000

Total Revenues: $490,000

Expenses:

• Salaries and benefits: $150,000
• Depreciation expense: $90,000
• General/administrative expenses: $70,000
• Bad debt expense: $40,000
• Purchased clinic services: $90,000
• Interest expense: $20,000

Total Expenses: $460,000

Calculation of Net Income

Net income is computed as total revenues minus total expenses:

Net Income = Total Revenues - Total Expenses

= $490,000 - $460,000

= $30,000

This figure aligns with the entries provided and helps stakeholders assess the Clinic's profitability for 2008.

Analysis of Financial Data

The Warren Clinic’s income statement indicates a modest profit margin, signaling effective cost management relative to revenue. The high proportion of salaries and benefits reflects the labor-intensive nature of healthcare services. The inclusion of depreciation expense indicates investment in facilities or equipment, which affects long-term sustainability. Bad debt expense highlights challenges in receivables collection, a common issue in healthcare billing.

The total revenue of $490,000 is slightly offset by expenses of $460,000, resulting in net income, which provides a basis for comparing profitability with industry benchmarks or other clinics.

Comparison with Other Income Statements

In comparison, the BestCare HMO statement reflects a different organizational structure, emphasizing premiums earned and a provision for bad debts, aligned with insurance operations. The Green Valley Nursing Home’s statement includes taxes, showcasing the distinction between for-profit and not-for-profit entities. These differences illustrate variances in revenue recognition, cost structures, and financial obligations inherent in different healthcare organizations.

Conclusion

Reordering and analyzing the Warren Clinic’s 2008 entries provide insights into its operations, financial position, and profitability. Proper classification of revenues and expenses enables meaningful interpretation and comparison with other entities. Ensuring accurate financial statements supports better decision-making for management, investors, and stakeholders.

References

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