Diaz Hospital provides a wide range of health services in its community. The hospital's board of directors has authorized the following capital expenditures:

The expenditures are planned for October 1, 20A, and the board wishes to know the amount of borrowing, if any, necessary on that date. M. Kelly, the controller, has gathered the following information to be used in preparing an analysis of future cash flows.
(a) Billings, made in the month of service, for the first 6 months of 20A are listed below:

Of the billings, 90% are made to third parties, such as federal or state governments and private insurance companies. The remaining 10% of billings are made directly to patients. Historical patterns of billing collections are as follows:

Estimated billings for the last 6 months of 20A follow. The same billing and collection patterns that have been experienced during the first 6 months of 20A are expected to continue during the last 6 months of the year.

(b) The purchases that have been made during the past 3 months and the planned purchases for the last 6 months of 20A are presented in the following schedule:

All purchases are made on account, and accounts payable are remitted in the month following the purchase.
(c) Salaries for each month during the remainder of 20A are expected to be $ 1,500,000 per month plus 20% of that month's billings. Salaries are paid in the month of service.
(d) Monthly depreciation charges are $125,000.
(e) Interest expense is $ 150,000 per month and interest payments of $450,000 are made on the last day of each calendar quarter.
(f) Endowment fund income is expected to continue to total $175,000 per month.
(g) The hospital has a cash balance of $300,000 on July 1, 20A, and has a policy of maintaining a minimum end-of-month cash balance of 10% of the current month's purchases.
(h) The hospital employs a calendar year reporting period.
Required:
(1) Prepare a schedule of budgeted cash receipts by month for the third quarter of 20A.
(2) Prepare a schedule of budgeted cash disbursements by month for the third quarter of 20A.
(3) Determine the amount of borrowing, if any, necessary on October 1, 20A, to acquire the capital items totaling $3,700,000 and still maintain the minimum required cash balance.

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Inter-aortic balloon pump.. $1,100,000 700,000 500,000 X-ray equipment. Laboratory equipment. 1.400,000 $3,700,000 Month Amount $4,400,000 4,400,000 4,500,000 4,500,000 5,000,000 5,000,000 January February March .. April May.... June Percent of Third Party Percent of Direct Patient Billings Billings 10% Month of service Month following service... Second month following service Uncollectible. 20% 50 20 10 40 40 10 Estimated Amount $4,500,000 5,000,000 5,500,000 5,700,000 5,800,000 5,500,000 Month July Augustre September.... October November December...mn Month April. May. June July August September October November.... December Amount $1,100,000 1,200,000 1,200,000 1,250,000 1,500,000 1,850,000 1,950,000 2,250,000 1,750,000