I More info a. Cash collections from services in July, August, and September, are projected to be $97,000, $150,000, and $121,000 respectively. b. Cash payments for the upcoming third quarter are projected to be $146,000 in July, $109,000 in August, and $139,000 in September. c. The cash balance as of the first day of the third quarter is projected to be $35,000. d. The health center has a policy that it must maintain a minimum cash balance of $22,000. The health center has a line of credit with the local bank that allows it to borrow funds in months that it would not otherwise have its minimum balance. If the company has more than its minimum balance at the end of any given month, it uses the excess funds to pay off any outstanding line of credit balance. Each month, Fielding Health Center pays interest on the prior month's line of credit ending balance. The actual interest rate that the health center will pay floats since it is tied to the prime rate. However, the interest paid during the budget period is expected to be 3% of the prior month's line of credit ending balance (if the company did not have an outstanding balance at the end of the prior month, then the health center does not have to pay any interest). All line of credit borrowings are taken by the end of the month (when the the cash balance has not met its minimum balance), or paid off by the end of the month (when the cash balance is sufficient). As of the first day of the third quarter, Fielding Health Center did not have a balance on its line of credit.
I More info a. Cash collections from services in July, August, and September, are projected to be $97,000, $150,000, and $121,000 respectively. b. Cash payments for the upcoming third quarter are projected to be $146,000 in July, $109,000 in August, and $139,000 in September. c. The cash balance as of the first day of the third quarter is projected to be $35,000. d. The health center has a policy that it must maintain a minimum cash balance of $22,000. The health center has a line of credit with the local bank that allows it to borrow funds in months that it would not otherwise have its minimum balance. If the company has more than its minimum balance at the end of any given month, it uses the excess funds to pay off any outstanding line of credit balance. Each month, Fielding Health Center pays interest on the prior month's line of credit ending balance. The actual interest rate that the health center will pay floats since it is tied to the prime rate. However, the interest paid during the budget period is expected to be 3% of the prior month's line of credit ending balance (if the company did not have an outstanding balance at the end of the prior month, then the health center does not have to pay any interest). All line of credit borrowings are taken by the end of the month (when the the cash balance has not met its minimum balance), or paid off by the end of the month (when the cash balance is sufficient). As of the first day of the third quarter, Fielding Health Center did not have a balance on its line of credit.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
6
Transcribed Image Text:Req
Prep
input
bala
B
20
EE
11
-
More info
a. Cash collections from services in July, August, and September, are projected to be $97,000, $150,000, and
$121,000 respectively.
b. Cash payments for the upcoming third quarter are projected to be $146,000 in July, $109,000 in August, and
$139,000 in September.
c. The cash balance as of the first day of the third quarter is projected to be $35,000.
d. The health center has a policy that it must maintain a minimum cash balance of $22,000.
The health center has a line of credit with the local bank that allows it to borrow funds in months that it would not
otherwise have its minimum balance. If the company has more than its minimum balance at the end of any given
month, it uses the excess funds to pay off any outstanding line of credit balance. Each month, Fielding Health Center
pays interest on the prior month's line of credit ending balance. The actual interest rate that the health center will pay
floats since it is tied to the prime rate. However, the interest paid during the budget period is expected to be 3% of
the prior month's line of credit ending balance (if the company did not have an outstanding balance at the end of the
prior month, then the health center does not have to pay any interest). All line of credit borrowings are taken by the
end of the month (when the the cash balance has not met its minimum balance), or paid off by the end of the month
(when the cash balance is sufficient). As of the first day of the third quarter, Fielding Health Center did not have a
balance on its line of credit.
Print
Done
X
Transcribed Image Text:Fielding Health Center provides a variety of medical services. The company is preparing its cash budget for the upcoming third quarter. The
following transactions are expected to occur.
Click the icon to view the expected transactions.)
Requirement
Prepare a combined cash budget for Fielding Health Center for the third quarter, with a column for each month and for the quarter total. (If a
input field is not used in the table leave the input field empty; do not enter a zero. Use parentheses or a minus sign for negative ending cash
balances.)
Fielding Health Center
Combined Cash Budget
For the Months of July through September
July
August
September
Quarter
Beginning balance of cash
35000
Plus: Cash collections:
97000
Total cash available
132000
146000
Less: Cash payments
Ending cash balance before financing
(14000)
Financing:
Plus: New borrowings
Less: Debt repayments
Less: Interest payments
Ending cash balance
22000
150000
172000
109000
63000
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