Question

The 2018 Income Statement and Balance Sheet of Tampa Clinic, a not-for-profit organization, are presented below. Tampa Clinic Income Statement Year Ended December 31, 2018 Operating Revenues: Patient service revenue $524,630 Less provision for bad debts (27630) $497,000 Net patient service revenue Other revenue Net operating revenues 10,000 $507,000 Expenses: Salaries and benefits Supplies Insurance Depreciation Interest Total expenses Operating income Nonoperating income: Investment income Net income $231,950 76,050 16,700 8,000 41,000 $373,700 $133,300 S 2,700 $136,000

Answer 1

$//img.homeworklib.com/questions/d4dd4590-5d06-11ea-8a06-87e9aabb8c51.gif?x-oss-process=image/resize,w_560$ a.) Tampa Clinic - Cash flow statement	2018
Cash flows from operating activities
Operating income	1,33,300
Adjustments for:
Depreciation	8,000
Interest (To be classified under Financing Activities)	41,000
Decrease in new patient account receivable	10,000
Increase in Inventories	-9,000
Increase in accounts payables	16,000
Decrease in accrued expenses	-2,000
Net cash from operating activities	1,97,300
Cash flows from investing activities
Capital expenditure (Difference between Gross Assets of 2017 & 2018 - 290 less 70)	-2,20,000
Purchase of LT securities	-27,000
Investment Income	2,700
Net cash used in investing activities	-2,44,300
Cash flows from financing activities
Proceeds from LT debts	1,10,000
Interest expenses	-41,000
Net cash used in financing activities	69,000
Net increase in cash and cash equivalents	22,000
Cash and cash equivalents at beginning of period	33,000
Cash and cash equivalents at end of period	55,000

B.

Tampa Clinic FY 2018 and Sunnyvale clinic FY 2015 cash flow statements have been prepared on indirect method basis. Sunnyvale’s proceeds from long term debts ($ 32.7 mn) have been used for purchase of fixed assets and other investments. In contrast, Tampa clinic’s Investments, seems to have been funded through a mix of proceeds from operations and long term debts.

Operating activities

Sunnyvale’s new patient account receivable, inventories, Accrued expenses have been increasing while accounts payable have reduced. However, Tampa’s Inventories and Accounts payable have been increasing and new patient account receivable and accrued expenses have fallen. Tampa has interest expenses which is removed from cash flow from operations and has been adjusted to Cash flow from financing activities. Both companies have generated positive operating cash flows.

Investing activities

Both companies have invested in Capital expenditures for their respective business and long term securities. In addition, Sunnyvale has recorded purchase of short term securities.

Financing activities

Sunnyvale’s have proceeds from Bank loans and long term debt issuance however Tampa has only Long term debt issuance. Tampa has also been paying interest on the borrowings which is not been seen in Sunnyvale’s cash flow statement.