Modern Healthcare, a group practice clinic with 10 physicians, had the following income in 2020: 

The following changes are expected in 2021: 

1. The clinic is expecting a two percent decline in revenues because of increasing pressure from insurance companies. 

2. Physicians are planning to hire a physician assistant at a salary of $50,000 per year. 

3. Training costs are expected to increase by $15,000. 

4. Supplies are expected to increase to be 10 percent of revenue. 

5. Phone, fax, and insurance amounts will stay the same. 

6. Depreciation expense will increase by $20,000 per year, since the clinic is planning to purchase equipment for $125,000. 

7. Utilities and miscellaneous expenses are expected to increase by five percent next year. 8. Taxes on income will be 20 percent. 

Required 

Prepare a budgeted income statement for Modern Healthcare for the year 2021.

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Revenue $3,250,000 Less operating expenses: Salaries Physicians $1,300,000 Nurses 152,000 Nursing aide Receptionist Accounting services Training Supplies 68,500 50,000 45,000 120,000 250,000 Phone and fax 3,750 Insurance 275,000 Depreciation 242,000 Utilities 19,800 Miscellaneous 66,000 Total operating expenses 2,592,050 Income before taxes 657,950 Less taxes on income 131,590 Net income $ 526,360