Corrigan Health Center

Combined Cash Budget

For the Months of July through September

Beginning balance of cash

Plus: Cash collections

Total cash available

Less: Cash payments

Ending cash balance before financing

Financing:

Plus: New borrowings

Less: Debt repayments

Less: Interest payments

Ending cash balance

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a$.$ Cash collections from services in July, August, and September, are projected to be $$99,000,$$$156,000,$ and $$120,000$

respectively.

b$.$ Cash payments for the upcoming third quarter are projected to be $$145,000$ in July, $$101,000$ in August, and $$137,000$ in

September.

c$.$ The cash balance as of the first day of the third quarter is projected to be $$31,000.$

d$.$ The health center has a policy that it must maintain a minimum cash balance of $$24,000.$

The health center has a line of credit with the local bank that allows it to borrow funds in months that it would not otherwise

have its minimum balance. If the company has more than its minimum balance at the end of any given month, it uses the

excess funds to pay off any outstanding line of credit balance. Each month, Corrigan Health Center pays interest on the

prior month's line of credit ending balance. The actual interest rate that the health center will pay floats since it is tied to the

prime rate. However, the interest rate paid during the budget period is expected to be $2\%$ of the prior month's line of credit

ending balance $($if the company did not have an outstanding balance at the end of the prior month, then the health center

does not have to pay any interest$).$ All line of credit borrowings are taken by the end of the month $($when the the cash balance

has not met its minimum balance$),$ or paid off by the end of the month $($when the cash balance is sufficient$).$ As of the first day

of the third quarter, Corrigan Health Center did not have a balance on its line of credit.