3. General Hospital provides a wide range of health services in its community. The board of directors has authorized the following capital expenditures: Intra-aortic balloon pump $1,400,000 Computed tomographic scanner 850,000 X-ray equipment 550,000 Laboratory equipment 1,200,000 Total $4,000,000 The expenditures are planned for October 1, 20X7, and the board wishes to know the amount of borrowing, if any, necessary on that date. Rebecca Singer, hospital controller, has gathered the following information to be used in preparing an analysis of future cash flows. Billings, made in the month of service, for 20X7 are shown below, with actual amounts for January through June and estimated amounts for July through December:

Month Actual Amount January $5,300,000 February 5,300,000 March 5,400,000 April 5,400,000 May 6,000,000 June 6,000,000 July (estimated) 5,800,000 August (estimated) 6,000,000 September (estimated) 6,600,000 October (estimated) 6,800,000 November (estimated) 7,000,000 December (estimated) 6,600,000 Ninety percent of Highline billings are made to third parties, such as BlueCross, federal or state governments, and private insurance companies. The remaining 10% of the billings are made directly to patients. Historical patterns of billing collections are: Third-Party Billings Direct-Patient Billings Month of service 20% 10% Month following service 50 40 Second month following service 20 40 Uncollectible 10 10 Singer expects the same billing and collection patterns that have been experienced during the first six months of 20X7 to continue during the last six months of the year. The following schedule presents the purchases that have been made during the past three months and the planned purchases for the last six months of 20X7. Month Amount April $1,300,000 May 1,450,000 June 1,450,000 July 1,500,000 August 1,800,000 September 2,200,000 October 2,350,000 November 2,700,000 December 2,100,000 All purchases are made on account, and accounts payable are remitted in the month following the purchase. Salaries for each month during the remainder of 20X7 are expected to be $1,800,000 per month plus 20% of that months billings. Salaries are paid in the month of service. Highlines monthly depreciation charges are $150,000. Highline incurs interest expenses of $180,000 per month and makes interest payments of $540,000 on the last day of each calendar quarter. Endowment fund income is expected to continue to total $210,000 per month. Highline has a cash balance of $350,000 on July 1, 20X7, and has a policy of maintaining a minimum end-of-month cash balance of 10% of the current months purchases. Highline Hospital employs a calendar-year reporting period. 1. Prepare a schedule of budgeted cash receipts by month for the third quarter of 20X7. 2. Prepare a schedule of budgeted cash disbursements by month for the third quarter of 20X7. 3. Determine the amount of borrowing, if any, necessary on October 1, 20X7, to acquire the capital items totaling $4,000,000.