Healthy Life is a retail store selling home oxygen equipment. Healthy Life also services home oxygen equipment, for which the company bills customers monthly Healthy Life has budgeted for increases in service revenue of $600 each month due to a recent advertising campaign. The forecast of sales and service revenue for March-June 2018 is as follows: (Click the icon to view the forecast of sales and service revenue.) (Click the icon to view the collection information.) Read the requirements. .... Requirement 1. Calculate the cash that Healthy Life expects to collect in May and in June 2018. Show calculations for each month. Start by showing the cash collections of sales revenue, then complete the schedule by entering in the service revenue collections and the total cash collections for each month. (Complete all answer boxes. If there were no collections of revenue for a certain month, select "0%" in the "Collection %" column and enter a "0" in the appropriate May or June column.) Gross Expected Revenue Collection % April May June 7,500 X 97% = 7,275 Sales revenue: : April sales revenue collected in Apr May sales revenue collected in May June sales revenue collected in June 6,800 x 97% 6,596 7,800 x 97% 7,566 Service revenue: March service revenue collected in Apr. 35% = 1,610 4,600 x 4,600 x 0% = 0 March service revenue collected in May March service revenue collected in June 0 4,600 x 5,200 x 5,200 X 0% 65% 3,380 35% 1,820 April service revenue collected in Apr. April service revenue collected in May April service revenue collected in June May service revenue collected in May May service revenue collected in June 0% = 0 5,200 x 5,800 x 65% 3,770 5,800 x 35% = 2,030 une service revenue collected in June 6,400 X 65% 4,160 $ Total collections 12,265 $ 12,186 $ 13,756 Requirement 2a. Healthy Life has budgeted expenditures for May of $12,000 and requires a minimum cash balance of $270 at the end of each month. It has a cash alance on May 1 of $550. Given your answer to requirement 1, will Healthy Life need to borrow cash to cover its payments for May and maintain a minimum cash balance of $270 at the end of May? The total cash available for May exceeds the budgeted expenditures for the month; therefore, Healthy Life will be able to cover its payments for May and maintain minimum cash balance of $270 at the end of May. Requirement 2b. Assume (independently for each situation) that (1) May total revenues might be 10% lower or that (2) total costs might be 5% higher. Under each of those wo scenarios, show the total net cash for May and the amount Healthy Life would have to borrow to cover its cash payments for May and maintain a minimum cash alance of $270 at the end of May. (Again, assume a balance of $550 on May 1.) first calculate the cash excess or deficiency for May using the original numbers and under each scenario presented. On the next line, enter the amount of borrowing equired. (Enter all amounts to the nearest cent. Enter a cash deficiency with a minus sign or parentheses. Complete all answer boxes. Enter a "0" if no borrowing is equired.) May Costs Cash Budget For May Original Numbers 550 12,396 May Revenues Decrease 10% 550 Cash balance, beginning Add receipts Increase 5% 550 12396 11156.4 12946 11706.4 12946 Total cash available for needs Total disbursements Minimum cash balance desired Total cash needed Cash excess (deficiency) Data Table Month March Sales and Service Revenues Budget March-June 2018 Expected Sales Revenue Expected Service Revenue $ 5,500 $ 4,600 7,500 5,200 6,800 5,800 7,800 6,400 April Total Revenue $ 10,100 12,700 12,600 14,200 May June Print Done More Info Almost all of the sales revenues of the oxygen equipment are credit card sales; cash sales are negligible. The credit card company deposits 97% of the revenues recorded each day into Healthy Life's account overnight. For the servicing of home oxygen equipment, 65% of oxygen services billed each month is collected in the month of the service, and 35% is collected in the month following the service. Print Done Requirements 1. Calculate the cash that Healthy Life expects to collect in April, May and June 2018 from sales and service revenue. Show calculations for each month. 2. Healthy Life has budgeted expenditures for May of $12,000 and requires a minimum cash balance of $270 at the end of each month. It has a cash balance on May 1 of $550. a. Given your answer to requirement 1, will Healthy Life need to borrow cash to cover its payments for May and maintain a minimum cash balance of $270 at the end of May? b. Assume (independently for each situation) that (1) May total revenues might also be 10% lower or that (2) total costs might be 5% higher. Under each of those two scenarios, show the total net cash for May and the amount Healthy Life would have to borrow to cover its cash payments for May and maintain a minimum cash balance of $270 at the end of May. (Again, assume a balance of $550 on May 1.) 3. Why do Healthy Life's managers prepare a cash budget in addition to the revenue, expenses, and operating income budget? Has preparing the cash budget been helpful? Explain briefly