Month July August September October November December Planned amount $1,250,000 1,500,000 1,850,000 1,950,000 2,250,000 1,750,000 Additional information All purchases are on credit and accounts payable are paid in the month following the purchase. Salaries for the remainder of the year are expected to be $1,500,000 per month plus twenty per cent of the month's billings. Salares are paid in the month of service. The hospital's monthly depreciation charges amount to $125,000. The hospital incurs interest expense of $150,000 per month and makes interest payments on the last day of the quarter (i.e. 31 March, 30 June, 30 September and 31 December). Investment income is $175,000 per month, which is collected one month in arrears. The hospital has a cash balance of $300,000 on 1 July. The hospital has a policy of maintaining a minimum end-of-month cash balance equal to ten percent of the current month's purchases. The hospital uses a calendar year (1 January to 31 December) reporting period. Required Prepare a cash budget for the last half of the year (i.e. 1 July to 31 December) that includes. Budgeted cash receipts broken down by month, by quarter and for the half year. - Budgeted cash payments broken down by month, by quarter and for the half year.
Month July August September October November December Planned amount $1,250,000 1,500,000 1,850,000 1,950,000 2,250,000 1,750,000 Additional information All purchases are on credit and accounts payable are paid in the month following the purchase. Salaries for the remainder of the year are expected to be $1,500,000 per month plus twenty per cent of the month's billings. Salares are paid in the month of service. The hospital's monthly depreciation charges amount to $125,000. The hospital incurs interest expense of $150,000 per month and makes interest payments on the last day of the quarter (i.e. 31 March, 30 June, 30 September and 31 December). Investment income is $175,000 per month, which is collected one month in arrears. The hospital has a cash balance of $300,000 on 1 July. The hospital has a policy of maintaining a minimum end-of-month cash balance equal to ten percent of the current month's purchases. The hospital uses a calendar year (1 January to 31 December) reporting period. Required Prepare a cash budget for the last half of the year (i.e. 1 July to 31 December) that includes. Budgeted cash receipts broken down by month, by quarter and for the half year. - Budgeted cash payments broken down by month, by quarter and for the half year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Eighty per cent of the Tonsley Hospital's billings are made to health funds such as
Medicare and private health insurance companies. The remaining twenty per cent of
billings are made directly to patients. Historical patterns of billing receipts are as
follows.
Collected during the month of service
Collected during the month following service
Collected during the second month following service
Uncollectable
Month
July
August
September
October
The billing and collection patterns identified above were replicated during the first six
months of this year. There is no reason to suspect those patterns will not continue
during the last six months of the year.
Estimated billings for the last six months of the year are listed below.
November
December
Health
fund
billings
(per cent)
50
20
20
10
Direct
patient
billings
(per cent)
Month
April
May
June
20
40
30
10
Estimated
amount
$4,500,000
5,000,000
5,500,000
5,700,000
5,800,000
5,500,000
The actual purchases of the past three months and the planned purchases for the last
six months of this year are presented in the following schedule.
Actual
amount
$1,100,000
1,200,000
1,200,000
Transcribed Image Text:Month
July
August
September
October
November
December
Planned
amount
$1,250,000
1,500,000
1,850,000
1,950,000
2,250,000
1,750,000
Additional information
All purchases are on credit and accounts payable are paid in the month following the purchase.
Salaries for the remainder of the year are expected to be $1,500,000 per month plus twenty per cent
of the month's billings. Salares are paid in the month of service.
The hospital's monthly depreciation charges amount to $125,000.
The hospital incurs interest expense of $150,000 per month and makes interest payments on the last
day of the quarter (i.e. 31 March, 30 June, 30 September and 31 December).
Investment income is $175,000 per month, which is collected one month in arrears.
The hospital has a cash balance of $300,000 on 1 July.
The hospital has a policy of maintaining a minimum end-of-month cash balance equal to ten
percent of the current month's purchases.
The hospital uses a calendar year (1 January to 31 December) reporting period.
Required
Prepare a cash budget for the last half of the year (i.e. 1 July to 31 December) that includes.
- Budgeted cash receipts broken down by month, by quarter and for the half year.
Budgeted cash payments broken down by month, by quarter and for the half year.
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