Techlabs operates a computer training center. The following data relate to the p
ID: 2371166 • Letter: T
Question
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 $50,000 Accounts Payable $40,000 Accounts receivable 40,000 Note payable 60,000 Equipment (net) 120,000 Common stock 30,000 Retained earnings 80,000 ---------- ----------- Total $210,000 $210,000 2) Tuition revenue in December 2011 was $80,000, and tuition revenue budgeted for January 2012 is $90,000. 3) Fifty 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, $40,000; rent, $5,000; depreciation on equipment, $7,000; utilities, $800; other, $2,000. 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 $30,000 of computer equipment in January 2012. The anticipated $7,000 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 10 percent per annum and requires monthly interest payments of $500. 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. REQUIRED: Complete the following budgets; A) Cash Budget 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 of purchases of computer equipment Payment of interest on note Payment of taxes ________ Total disbursements ________ Plus beginning cash balance ________ Ending Cash Balance $________ B) Budget Income Statement For January 2012 Tuition revenue $ Less: Salaries Rent Utilities Depreciation Other Interest expense __________ Total expense __________ Income before taxes Taxes on income ___________ Net income $__________ C) Budgeted Balance Sheet As of January 30, 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 $____________ 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 $50,000 Accounts Payable $40,000 Accounts receivable 40,000 Note payable 60,000 Equipment (net) 120,000 Common stock 30,000 Retained earnings 80,000 ---------- ----------- Total $210,000 $210,000 2) Tuition revenue in December 2011 was $80,000, and tuition revenue budgeted for January 2012 is $90,000. 3) Fifty 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, $40,000; rent, $5,000; depreciation on equipment, $7,000; utilities, $800; other, $2,000. 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 $30,000 of computer equipment in January 2012. The anticipated $7,000 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 10 percent per annum and requires monthly interest payments of $500. 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. REQUIRED: Complete the following budgets; A) Cash Budget 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 of purchases of computer equipment Payment of interest on note Payment of taxes ________ Total disbursements ________ Plus beginning cash balance ________ Ending Cash Balance $________ B) Budget Income Statement For January 2012 Tuition revenue $ Less: Salaries Rent Utilities Depreciation Other Interest expense __________ Total expense __________ Income before taxes Taxes on income ___________ Net income $__________ C) Budgeted Balance Sheet As of January 30, 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
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