Dr. Roger Jones Cash Budget - Case Solution

This case solution includes an Excel file with calculations.

I. SYNTHESIS

A. Introduction – Dr. Roger Jones

Dr. Roger Jones is a successful dentist but is experiencing recurring financial difficulties. For example, Jones owns his office building, which he leased to the professional corporation that housed his dental practice (he owns all shares in the corporation). After the corporation’s failure to pay payroll taxes for the past six months, however, the Internal Revenue Service is threatening to impound the business and sell its assets.

Also, the corporation has had difficulty paying its suppliers, owing to one of them over $200,000 plus interest. In the past, Jones had borrowed money on the equity in either his personal residence or his office building, but he has grown weary of these recurring problems and has hired a local consultant for advice.

B. Case Facts/Information – Dr. Roger Jones Cash Budget

• Benefits include Dr. Roger Jones’s share of social security and a health insurance premium for all employees.
• Although all revenues billed in a month are not collected, the cash flowing into the business is approximately equal to the month’s billings because of collections from prior months.
• The office is open Monday through Thursday from 9:00 A.M. to 4:00 P.M. and on Friday from 9:00 A.M. to 12:30 P.M. A total of 32 hours are worked each week. Additional hours could be worked, but Jones is reluctant to do so because of other personal endeavors that he enjoys.
• He estimates that dentist assistants are busy about 65 to 70% of the time.

II. POINT OF VIEW

We are taking the point of view of the…