1, Using Financial Statements

Financial Statements for Doctors Smith and Brown are provided in the next couple of pages. Use the doctors Balance Sheet, Statement of Net Income, and Statement of Capital for the three questions for this discussion.

1. First, identify the following doctors Balance Sheet and Statement of Net Income components. Then, list the name of each component and its amount(s) from the appropriate financial statement as listed below

Item Amount

• Current Liabilities
• Total Assets
• Income from Operations
• Accumulated Depreciation
• Total Operating Revenue
• Current Portion of Long-Term Debt
• Interest Income

2. Now, take a look at Doctors Smith and Browns Balance Sheet, in it Patient Accounts Receivable is stated as $40,000. Do you think this figure is net of an Allowance for Bad Debts? (why or why not?)

3. Lastly, refer to the Doctors Smith and Brown financial statements, set up a worksheet for the current ratio and the quick ratio then compute the ratios.

Doctors Smith and Brown Statement of Changes in Capital for the Three Months Ended March 31, 2 Beginning Balance Net Income Ending Balance $720,000 80,000 $800,000 Doctors Smith and Brown: Statement of Net Income for the Three Months Ended March 31, 2 180,000 0 180,000 16,650 10,150 Revenue Net patient service revenue Other revenue Total Operating Revenue Expenses Nursing/PA salaries Clerical salaries Payroll taxes/employee benefits Medical supplies and drugs Professional fees Dues and publications Janitorial service Office supplies Repairs and maintenance Utilities and telephone Depreciation Interest Other Total Expenses Income from Operations Nonoperating Gains (Losses) Interest Income Nonoperating Gains, Net Net Income 15,000 3,000 2,400 1,200 1,500 1,200 6,000 30,000 3,100 5,000 100,000 80,000 0 80,000 Doctors Smith and Brown Balance Sheet March 31, 2 25,000 40,000 5,000 70,000 500,000 800,000 1,300,000 (480,000) 820,000 100,000 920,000 Assets Current Assets Cash and cash equivalents Patient accounts receivable Inventoriessupplies and drugs Total Current Assets Property, Plant, and Equipment Buildings and Improvements Equipment Total Less Accumulated Depreciation Net Depreciable Assets Land Property, Plant, and Equipment, Net Other Assets Total Assets Liabilities and Capital Current Liabilities Current maturities of long-term debt Accounts payable and accrued expenses Total Current Liabilities Long-Term Debt Less Current Portion of Long-Term Debt Net Long-Term Debt Total Liabilities Capital Total Liabilities and Capital 10,000 1,000,000 10,000 20,000 30,000 180,000 (10,000) 170,000 200,000 800,000 1,000,000