Question
Consider the following income statement: BestCare HMP Statement of Operations Year Ended June 30, 2012 (in thousand Revenue: Premiums earned $26,682 Coinsurance 1,689 Interest and
Consider the following income statement:
BestCare HMP Statement of Operations Year Ended June 30, 2012 (in thousand
Revenue:
Premiums earned $26,682
Coinsurance 1,689
Interest and other income 242
Total revenues $28,613
Expenses:
Salaries and benefits $15,154
Medical supplies and drugs 7,507
Insurance 3,963
Provision for bad debts 19
Depreciation 367
Interest 385
Total expenses $27,395
Net income $ 1,218
a) How does this income statement differ from the one presented in Exhibit 11.1?
b) Did BestCare spend $367,000 on new fixed assets during fiscal year 2012? If not, what is the economic rational behind its reported depreciation expense?
c) Explain the provision for bad debts entry.
d) What is BestCare's total margin? How can it be interpreted?
Exhibit 11.1 Park Ridge Homecare Statement of Operations for Year Ended December 31, 2012 and 2011(in thousands)
Revenues:
Patient service revenue $ 4,042 $ 2,687
Provision for bad debts 46 21
Net patient service revenue $ 3,996 $ 2,666
Other operating revenue 27 32
Total revenues $ 4,023 $ 2,698
Expenses:
Salaries and benefits $ 2,714 $ 1,835
Supplies and drugs 1,042 675
Insurance 90 83
Depreciation 21 15
Interest 16 19
Total expenses $ 3,883 $ 2,627
Operating income $ 140 $ 71
Nonoperating income:
Contributions $ 10 $ 22
Investment income 13 6
Total nonoperating income $ 23 $ 28
Net income (excess of revenues
over expenses) $163 $99
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