Wahoo Clinic provided you with the following information. Prepare a cash budget

Question

Wahoo Clinic provided you with the following information. Prepare a cash budget for the quarter ending December 2010 and for the months October through December 2010.
a. Revenues:

Actual Patient
Revenues 2010
Jul.
$1,400,000
Aug.
$1,500,000
Sept.
$1,300,000

Projected Patient
Revenues 2010
Oct.
$1,500,000
Nov.
$1,600,000
Dec.
$1,700,000

Projected Patient
Revenues 2011
Jan.
$1,700,000
Feb.
$1,300,000
Mar.
$1,200,000

b. Patient Revenues are collected as follows:
60%
month of service
30%
1 month after service
10%
2 months after service

c.

Explanation / Answer

SCHEDULE OF EXPECTED CASH COLLECTIONS FROM CUSTOMERS: Credit Sales Oct Nov Dec Aug       150,000 Sep       390,000       130,000 Oct       900,000       450,000       150,000 Nov       960,000       480,000 Dec       780,000 Total Cash Collections    1,440,000    1,540,000    1,410,000 SCHEDULE FOR EXPECTED PAYMENTS FOR PURCHASE OF INVENTORY Inventory purchases Oct Nov Dec Oct    1,199,000 Nov    1,263,800 Dec 1390600 Total Payments for Inventory Purchases    1,199,000    1,263,800    1,390,600 Cash Budget For the Two Months of May and June Oct Nov Dec Cash balance $200,000 $505,520       816,200 Add: Receipts Collections from customers 1,440,000 1,540,000 1,410,000    Other revenue 44,000 55,000 52,000 Total receipts 1,484,000 1,595,000 1,462,000 Total Available Cash 1,684,000 2,100,520 2,278,200 Less: Disbursements Purchases of inventory 1,199,000 1,263,800 1,390,600 Total disbursements    1,199,000    1,263,800    1,390,600 Excess (deficiency of available cash over disbursements)       485,000       836,720       887,600 Financing    Borrowings       20,520    Repayments       20,520              -   Ending cash balance $505,520     816,200     887,600

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