Options for question 2a. a)exceed or is less than or is equal to, b) will or will not
Options for question 3. a) cash flows or profit and losses, b) assets to pay debtors in the event of liquidation or cash to pay expenditures as the come due or profits to meet investor expectations, c) it may still have insufficient cash needed or it means it will have sufficient cash, d) may need to initiate a plan to borrow money to finance shortfall or will not need to do any additional planning, e) does not guarantee or guarantees, f) don't necessarily need to prepare a cash budget if an operating income budget is prepared or need to prepare a cash budget in addition to an operating income budget.
HealthWorld is a retail store selling home oxygen equipment. HealthWorld also services home oxygen equipment, for which the company bills customers monthly. HealthWorld has budgeted for increases in service revenue of $700 each month due to a recent advertising campaign. The forecast of sales and service revenue for March-June 2021 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 HealthWorld expects to collect in May and in June 2021. 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 input fields. 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 Sales revenue: April sales revenue collected in Apr May sales revenue collected in May June sales revenue collected in June Service revenue: March service revenue collected in Apr. = IO = = March service revenue collected in May March service revenue collected in June 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 x x x x x x x x June service revenue collected in June - Total collections Requirement 2a. Health World has budgeted expenditures for May of $13,800 and requires a minimum cash balance of $270 at the end of each month. It has a cash balance on May 1 of $300. Given your answer to requirement 1, will HealthWorld 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 the budgeted expenditures for month; therefore, Health World be able to cover its payments for May and maintain a 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 two scenarios, show the total net cash for May and the amount HealthWorld 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 $300 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 required. (Enter all amounts to the nearest cent. Enter a cash deficiency with a minus sign or parentheses. Complete all input fields. Enter a "0" if no borrowing is required.) Cash Budget For May Original Numbers May Revenues May Costs Decrease 10% Increase 5% Cash balance, beginning Add receipts Total cash available for needs Total disbursements Minimum cash balance desired Total cash needed Cash excess (deficiency) Borrowing required Requirement 3. Why do HealthWorld'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. If Health World is profitable on HealthWorld's managers prepare a cash budget in addition to the operating income budget to plan V to ensure that the company has adequate an accrual accounting basis, V to make scheduled payments for its expenses. HealthWorld's managers operating plan that adequate cash will be available, so Health World's managers Building a profitable - Data table Sales and Service Revenues Budget March-June 2021 Expected Sales Expected Service Total Month Revenue Revenue Revenue March $ 8,000 $ 5,000 $ 13,000 April 5,700 14,700 May 8,700 6,400 15,100 June 10,000 7,100 17,100 9,000
