Reference no: EM132905879
Problem - On January 1, 2020, Dr. Badal intends to establish his own medical facility, Badal Medical Centre, in Browns Town, St. Ann. She intends to finance the start up with a bank loan of $2,200,000 and so assumes that the loan will be disbursed during the first week of January 2020. The loan is to be repaid with monthly interest payments of $250,000 and principal payments of $200,000 at the end of each quarter.
She will outfit the facility with equipment that will be purchased over a three-year period in anticipation of opening his facility. However, she projects that she needs to buy additional equipment to ensure that she provides cutting edge service to her patients. Equipment costing $400,000 will be purchased in February, $500,000 in April and $400,000 in June.
The table below reveals the projected monthly billing revenue for services:
January 4 400 000
February 4 400 000
March 4 500 000
April 4 500 000
May 5 000 000
June 5 000 00
Badal has advised of the following:
Patients will be required to pay 20% of the billing fee upfront. 75% of total monthly billing will be paid by the Patients' insurance providers the following month. 5% of total monthly billing is deemed uncollectible.
The monthly cost of supplies is equivalent to 40% of the billings' revenue. Half of this cost is paid in the month of purchase. The balance is to be paid in the following month.
Monthly salaries are estimated to be $900,000 plus 10% of total billings revenue.
Other Operating expenses are estimated to be 11% of billings revenue each month.
Required - Prepare a Cash Budget for the six months ending June 2020 for Badal Medical Services (Show all workings).
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