Modern Healthcare, a group practice clinic with 10 physicians, had the following income in 2011

The following changes are expected in 2012:
1. The clinic is expecting a 5 percent decline in revenues because of increasing pressure from insurance companies.
2. Physicians are planning to hire a physician assistant at a salary of $80,000 per year.
3. Training costs are expected to increase by $20,000.
4. Supplies are expected to increase to 9 percent of revenue.
5. Phone, fax, and insurance amounts will stay the same.
6. Depreciation expense will increase by $25,000 per year, since the clinic is planning to purchase equipment for $125,000.
7. Utilities and miscellaneous expenses are expected to increase by 5 percent next year.
8. Taxes on income will be 35 percent.

Required
Prepare a budgeted income statement for Modern Healthcare for the year2012.

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Revenue $2,700,000 Less operating expenses: Salaries Physicians $1,100,000 150,000 68,500 50,000 38,000 170,000 210,000 2,750 275,000 242,000 19,800 66,000 Nurses Nursing aide Receptionist Accounting services Training Supplies Phone and fax Insurance Depreciation Utilities Miscellaneous 2,392,050 307,950 107,783 200,167 Total operating expenses Income before taxes Less taxes on income Net income