Integrated Physicians & Associates, an investor-owned company, had the following general ledger account balances at the end of 2015:

Gross patient service revenue (total charges) - $975,000

Contractual discounts and allowances to third-party payers - $250,000

Charges for charity (indigent) care - $100,000

Estimated provision for bad debts - $50,000

QUESTION:

Suppose the 2015 contractual discounts and allowances balance reported above is understated by $50,000. In other words, the correct balance should be $300,000. Assuming a 40 percent income tax rate, what would be the effect of the misstatement on Integrated Physicians & Associates' 2015 reported:

1. Net patient service revenue?

2. Total expenses (including income tax expense)?

3. Net income?