AP10-3 Master Budget [LO 2] Techlabs operates a computer training center. The fo
ID: 2354183 • Letter: A
Question
AP10-3Master Budget [LO 2]
Techlabs operates a computer training center. The following data relate to the preparation of a master budget for January 2012.
1. At the end of 2011, the company’s general ledger indicated the following balances:
Debits Credits
Cash $41,000 Accounts Payable $40,000
Accounts receivable 41,500 Note payable 58,000
Equipment (net) 112,000 Common stock 29,000
Retained earnings 67,500
Total $194,500
$194,500
2. Tuition revenue in December 2011 was $83,000, and tuition revenue budgeted for January 2012 is $91,000.
3. 50 percent of tuition revenue is collected in the month earned, and 50 percent is collected in the subsequent month. The receivable balance at the end of 2012 reflects tuition earned in December 2012.
4. Monthly expenses (excluding interest expense) are budgeted as follows: salaries, $32,000; rent, $4,300; depreciation on equipment, $8,000; utilities, $500; other, $2,200.
5. Expenses are paid in the month incurred. Purchases of equipment are paid in the month after purchase. The $40,000 payable at the end of 2011 represents money owed for the purchase of computer equipment in December 2011.
6. The company intends to purchase $27,000 of computer equipment in January 2012. The anticipated $8,000 per month of depreciation (see number 4) reflects the addition of $1,000 of monthly depreciation related to this purchase.
7. The note is at 9 percent per annum and requires monthly interest payments of $435. The payments are made on the 20th of each month.The principal must be paid in February of 2013.
8. The tax rate is 35 percent.
Complete the following budget: (Round answers to 0 decimal places, e.g. 5,250. Enter all amounts as positive amounts and subtract where necessary.)
Budgeted Cash Receipts and Disbursements
For January 2012
Cash Receipts
Collection of December 2011 tuition = $ ___________
Collection of January 2012 tuition
Total cash receipts
Cash Disbursements
Payment of salaries
Payment of rent
Payment of utilities
Payment of other expenses
Payment for purchases of computer equipment
Payment of interest on note
Payment of taxes
Total cash disbursements
Plus beginning cash balance
Ending cash balance = $ ______________
Complete the following budget: (Round answers to 0 decimal places, e.g. 5,250. Enter all amounts as positive amounts and subtract where necessary.)
Budgeted Income Statement
For January 2012
Tuition revenue = $ ___________
Less:
Salaries = $ ______________
Rent
Utilities
Other expenses
Depreciation
Interest expense
Total expense
Income before taxes
Taxes on income
Net income = $ ______________
Complete the following budget: (Round answers to 0 decimal places, e.g. 5,250.)
Budgeted Balance Sheet
As of January 2012
Assets
Cash = $ _________________
Accounts receivable
Equipment (net)
Total assets $ = ____________
Liabilities
Accounts payable = $____________
Note payable
Total liabilities
Stockholders’ equity
Common stock
Retained earnings
Total stockholders’ equity
Total liabilities and stockholders’ equity = $ ___________
Explanation / Answer
Budgeted Cash Receipts and Disbursements For January 2012 Cash Receipts Collection of December 2011 tuition = $ _41,500__ Collection of January 2012 tuition $ 45,500 Total cash receipts $87,000 Cash Disbursements Payment of salaries $32,000 Payment of rent $ 4,000 Payment of utilities $ 500 Payment of other expenses $ 2,200 Payment for purchases of computer equipment $40,000 Payment of interest on note $ 435 Payment of taxes $13,353 Total cash disbursements $ 92,488 Plus beginning cash balance $41,000 Ending cash balance = $ _35,512__ Complete the following budget: (Round answers to 0 decimal places, e.g. 5,250. Enter all amounts as positive amounts and subtract where necessary.) Budgeted Income Statement For January 2012 Tuition revenue = $ __91,000_________ Less: Salaries = $ 32,000__ Rent $ 4,000 Utilities $ 500 Other expenses $ 2,200 Depreciation $ 8,000 Interest expense $ 435 Total expense $47,135 Income before taxes $43,865 Taxes on income $13,353 Net income = $ 28,512 Complete the following budget: (Round answers to 0 decimal places, e.g. 5,250.) Budgeted Balance Sheet As of January 2012 Assets Cash = $ _355,12___ Accounts receivable 45,500 Equipment (net) $ 131,000 Total assets $ = _212,012 Liabilities Accounts payable = $_27,000___ Note payable $ 58,000 Total liabilities $85,000 Stockholders’ equity Common stock 29,000 Retained earnings 96,012 Total stockholders’ equity 125,012 Total liabilities and stockholders’ equity = $ 210,012_