Accounting Business Reporting for Decision Making

414 Accounting: Business Reporting for Decision Making

• Projected cash balance at the end of November is $30 000.


• Actual revenue for October and November and projected revenue for December and January are
  as follows.

October November December January

Cash sales

Sales on credit

$33 000

60 000

$ 31 000

80 000

$ 42 000

100 000

$30 000

50 000

Total sales $93 000 $111 000 $142 000 $80 000

• Analysis of past records has shown that credit sales are collected over a three-month period,
  with 50 per cent being collected in the month of the sale, 40 per cent in the next month, and the
  remainder in the following month.


• Projected expenditure during December and January is as follows.
  
  
  • Selling and administrative expenses are budgeted to be $58 000 each month.
  
  
  • A new car hoist will be purchased for $100 000, with a $20 000 cash payment in December
    and the balance to be paid in March.
  
  
  • Ken wants to maintain a minimum cash balance of $30 000.
  
  
  • As more customers will want their vehicles serviced prior to Christmas, the consumables
    store will need more supplies. Accordingly, an order has been placed for $45 000 of inven-
    tory. This will arrive in late November and be paid in December.
    Required
    a. Prepare a schedule showing receipts from customers for the credit sales.
    b. Prepare a cash budget for December and January.
    c. Prepare a report for Ken outlining his cash position over the Christmas period. Give advice
    regarding any financing requirements or investment opportunities.
  
  
  
  

9.54 Budgets and performance    LO6

Regional Healthcare Centre provides a range of healthcare services to the local community. Among

other services, the centre provides home visits by nurses to elderly patients. An allied health

worker, who performs a range of tasks such as housework and showering of patients, accompanies

the nursing staff. When the nurses are not visiting patients, the allied health staff work at the office

doing related administration work.

Each year, the centre receives a budget allocation from the state government’s department of

health. The objective of the program is to enable the elderly to remain in their own homes for as

long as possible. The department does not allow the centre to spend more than this allocation. The

centre, in  turn, allocates its budget among its various programs. The visiting nurse program was

approved and allocated $250 396 in 2017 and $279 476 in 2018 as follows:

2017 2018

Nurses

Allied health workers

Medical supplies

Cleaning supplies

Transportation

Clinic general overhead

$135 378

60 046

18 197

6 894

9 068

20 813

$145 019

71 500

21 402

9 216

11 144

21 195

Total expenditures $250 396 $279 476

Number of home visits

Average cost per home visit

4 312

58.07

5 101

54.79

The nursing staff received a 5 per cent increase in salary one-third of the way through 2018. The

allied health workers did not receive an increase in wages in either year. The prices of medical