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    Cash budget

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    The management of West Valley Memorial Hospital needs to prepare a cash budget for July 2006. The following information is available:
    a. The cash balance on July 1st is $236,000.
    b. Actual services performed during May and June and projected services for July are:
    Cash services (bills paid by individuals):
    May: $110,000 June: $90,000 July: $120,000
    Credit services (bills paid by insurance co):
    May: $900,000 June: $1,000,000 July: $875,000
    Credit sales are collected over a 2-month period, with 60% collected during the month the service is performed and 40% in the following month.
    c. Hospital personnel plan to purchase $80,000 of supplies during July on account. Accounts payable are usually paid one-half in the month of purchase and one-half in the following month. The accounts payable balance on July 1, 2006 is $35,000.
    d. Salaries and wages paid during July will be approximately $600,000. (ignore income and other tax withholdings)
    e. Depreciation on the hospital and equipment for July will be $100,000.
    f. A short- term bank loan of $80,000 (including interest) will be repaid in July.
    g. All other cash expenses for July will total $56,000.
    Prepare the hospital's July cash budget.

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    Solution Summary

    Excel file contains West Valley Memorial Hospital's cash budget for the month.