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Management Case Study

In: Business and Management

Submitted By euniceabiah
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A Sample Income Statement and Balance Sheet
A simplified set of financial statements is shown below:
Red Apple Naturopathic Clinic
Income Statement
For the year ended December 31, 20x1 | | | Revenue from patient services | 240,000 | | Revenue from supplement sales | 30,000 | | Total revenue | | 270,000 | | | | Less expenses | | | Reception staff | 24,000 | | Cost of goods sold (supplements) | 25,000 | | Supplies | 3,000 | | Rent | 36,000 | | Utilities (heat, light and business taxes) | 9,600 | | Amortization of leasehold improvements | 20,000 | | Total expenses | | 117,600 | | | | Net profit before drawings and taxes | | 152,400 | | | | Less taxes (assume 40%) | | 60,960 | Less Owner’s drawings (assume 6,000/mo.) | | 72,000 | Retained earnings (profit left in the business) | | 19,440 |
Red Apple Naturopathic Clinic
Balance Sheet
As of December 31, 20x1 Current assets | | Current liabilities | | Cash | 13,120 | Accounts payable | 3,000 | Accounts receivable | 4,320 | Current portion -bank loan | 10,000 | Inventory | 25,000 | | | Total current assets | 42,440 | | | | | Long term liabilities | | Long term assets | | Bank loan | 40,000 | Leasehold improvements | 100,000 | | | Less accumulated amortization | (20,000) | Owner’s equity | | Net leasehold improvements | 80,000 | Owner’s investment | 50,000 | | | Retained earnings | 19,440 | | | | | | | | | | 122,440 | | 122,440 |
Amortization Explained
Red Apple Clinic has two sources of revenue, from its patients and sales of supplements. These total a respectable $270,000 for last year. Obviously the clinic owner doesn’t get to keep all of this, for there are a number of expenses to be paid. Most of them like staff and rent which are paid in cash are pretty obvious. An example of a journal

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