Consider the following financial statements for Green Valley Nursing Home, Inc.

Question

Consider the following financial statements for Green Valley Nursing Home, Inc. a for profit long-term care facility:
Green Valley Nursing Home Inc.
Statement of Income and Retained Earnings
Year Ended December 31, 2011
Revenue:
Net patient service revenue $3,163,258
Other revenue 106,146
Expenses:
Salaries and benefits $1,515,438
Medical supplies and drugs 966,781
Insurance and other 296,357
Provision for bad debts 110,000
Depreciation 85,000
Interest 206,780
Total expenses $3,180,356
Operating Income $89,048
Provision for income tax 31,167
Net Income $57,881

a) HOW DOES THIS INCOME STATEMENT DIFFER FROM THE ONES PRESENTED IN EXHIBIT 3.1? AND 3.2?

B) WHY DOES GREEN VALLEY SHOW A PROVISION FOR INCOME TAXES WHILE THE OTHER TWO INCOME STATEMENT DID NOT?

C) WHAT IS GREEN VALLEYS TOTAL MARGIN? HOW DOES THSI VALUE COMPARE WITHE THE VALUES FOR SUNNYVALE CLINIC AND BESTCARE?

Explanation / Answer

Green Valley Nursing Home, Inc. Balance Sheet Year Ended December 31, 2XXX Assets Current Assets: Cash and cash equivalents $105,737 Investments $200,000 Net patient accounts receivable $215,600 Supplies $87,655 Total current assets $608,992 Property and equipment $2,250,000 Less accumulated depreciation $356,000 Net property and equipment $1,894,000 Total assets $2,502,992 Liabilities and Shareholders' Equity Current Liabilities: Accounts payable $72,250 Accrued expenses $192,900 Notes payable $100,000 Current portion of long-term debt $80,000 Total current liabilities $445,150 Long-term debt $1,700,000 Shareholders' Equity: Common stock, $10 par value $100,000 Retained earnings $257,842 Total shareholders' equity $357,842 Total liabilities and shareholders' equity $2,502,992

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