In this problem they are trying to show the relationship between the Income Statement and Balance Sheet.

The top part of the problem would be a summary Balance Sheet.

The Equation is Assets equal Liabilities and Equity. Solve this part first for all 4 of the Clinics.

When you have completed the calculations proceed to the Lower Part of the problem which is a simple Income Statement.

Compare the two YEAR ENDING Equity balances. from your Balance Sheet. You have a Equity Balance for December 31, 2015 and one for December 31, 2016. The DIFFERENCE between these two Equity Balances is the Increase in Equity.

The Increase in Equity is the DIFFERENCE between Revenue and Expense.