Cash Budgeting—Hospital The management of Table Rock MemorialHospital needs to p
ID: 2770821 • Letter: C
Question
Cash Budgeting—Hospital
The management of Table Rock MemorialHospital needs to prepare a cash budget forJuly
2009. The following information isavailable:
a. The cash balance on July 1, 2009, is$245,000.
b. Actualservices performed during May and June and projected services forJuly are:
May June July
Cash services (bills paid byindividuals
as they leave the hospital) . . . . . .. . . . . . . . . . . . . . . . . .$115,000 $98,000 $115,000
Credit services (bills paid byinsurance
the serviceis performed and 40% in the followingmonth.
c. Hospitalpersonnel plan to purchase $70,000 of supplies during July onaccount.
Accountspayable are usually paid one-half in the month of purchase andone-half in the
followingmonth. The accounts payable balance on July 1, 2009, is$30,000.
d. Salariesand wages paid during July will be approximately $650,000. (Ignoreincome and
other taxwithholdings.)
e.Depreciation on the hospital and equipment for July will be$120,000.
f. Ashort-term bank loan of $90,000 (including interest) will be repaidin July.
g. All othercash expenses for July will total$86,000.
Prepare the hospital’s July cashbudget.
Explanation / Answer
Cash Budget for the monthof July Opening Cash Balance 245,000.00 Cash Services Receipts 115,000.00 Credit Services Receipts June - 40% of 1075000 430,000.00 July - 60% of 950000 570,000.00 TotalReceipts 1,360,000.00 Less Payments July Purchases - 35000 June Purchases - 30000 65,000.00 Salaries & Wages 650,000.00 Repayment of Bank Loan 90,000.00 Other Cash Expenses 86,000.00 TotalPayments (891,000.00) ClosingBalance 469,000.00