Question

The following are account balances (in thousands) for Lima Health Plan. Prepare an income statement for the year ended December 21,20X0. (Hint: you must recognize which account balances qualify for the income statement). You will enter summary balances for total revenues Blank 1; total expenses Blank 2;operating income Blank 3; net income Blank 4.

Givens (in '000s):
Income tax Benefit of operating loss	$8,000
Net property and equipment	$2,000
Physician services expense	$164,000
Premium revenue	$125,000
Marketing expense	$11,000
Compensation expense	$13,000
Interest income and other revenue	$6,000
Outside referral expense	$4,000
Medicare revenue	$131,000
Occupancy and depreciation expense	$2,000
Medical claims payable	$37,000
Accounts receivable	$3,000
Emergency room expense	$14,000
Inpatient services expense	$101,000
Interest expense	$2,000
Medicaid revenue	$35,000
Owners' equity	$61,500
Cash & cash equivalents	$97,000
Long-term debt	$3,500
Other administrative expense	$2,000

Answer 1

Solution:

Income Statement - Lima Health Plan for year ended December 31, 20X0
Particulars	Amount
Revenue:
Premium Revenue	$125,000.00
Medicare Revenue	$131,000.00
Medicaid Revenue	$35,000.00
Total Revenue (A)	$291,000.00
Expenses:
Physician service expense	$164,000.00
Marketing Expense	$11,000.00
Compensation Expense	$13,000.00
Outside Referral Expense	$4,000.00
Occupancy and Depreciation Expense	$2,000.00
Emergency Room Expense	$14,000.00
Impatient Services expense	$101,000.00
Other administratvie expense	$2,000.00
Total Expense (B)	$311,000.00
Operating Income ( C ) (A-B)	-$20,000.00
Add: Interest & Other Revenue	$6,000.00
Add: Income tax benefit of operating loss	$8,000.00
Less: Interest Expense	-$2,000.00
Net Income	-$8,000.00