Payroll= 50,000 per month plus 0.50 x revenues Supplies =0.10 x revenues Rent =

Question

Payroll= 50,000 per month plus 0.50 x revenues

Supplies =0.10 x revenues

Rent = $50,000 per month

Debt service= $150,000 in july

capital expenditures=$75,000

in june Eight percent of payroll expense is paid in the month this expense was incurred, and 20% is paid in the following month reported. A.Determine during which months Aztec can invest surplus funds and during which months it might need to borrow. B. Build the cash budget , then build the sections of the cash budget using the relationship in the problem

Table 23-8 Revenues for Aztec Home Health Agency

January $500,000

February 500,000

March 600,000

April 600,000

May 700,000

June 800,000

July 1,000,000

August 1,000,000

Explanation / Answer

A In June, there is an excess of $40,000 which can be invested however in July and August, the balance is going down below $200,000 for which balance funds should be borrowed. The working on cash budget is provdeded in B

B. Here is the cash budget working

Working on revenue and receipts from customer

                  800,000

Cash Budget Calculation May June July Receipts Opening Balance $220,000 $240,000 $164,000 Receipts from customers $540,000 $600,000 $715,000 Payments Payroll Fixed $50,000 $50,000 $50,000 Payroll Variable $350,000 $400,000 $500,000 Supplies $70,000 $80,000 $100,000 Rent $50,000 $50,000 $50,000 Debt Service $150,000 Capital expenditure 80% $60,000 Capital expenditure 20% $15,000 Incremental Payroll $36,000 Total Payments $520,000 $676,000 $865,000 Closing Balance $240,000 $164,000 $14,000

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