2024 – Exam 3 Budgets and cost of Money Problem 1 The aCCounting Net TAN provide services for non for profit organization Their information

Exam 3 Budgets and cost of Money Problem 1. The aCCounting Net (TAN) provide services for non-for-profit organization. Their information is as follow at end of 2×14: Cash $70,000 Account Receivables 50,000 Equipment and Building 100,000 Account Payables 40,000 Notes Payables 10,000 Common Stock 90,000 Retained Earnings $80,000 Additional information: Account payable pertains to equipment purchased on December 2×14.

October 2×14 revenues was $50,000, November 2×14 revenues was $60,000, and December 2×14 was $70,000. Budgeted January 2×15 revenues are projected 20% higher than previous month. Usually 40 % of monthly revenues are collected between 1-30 days, 50 % between 31-60 days and the remaining revenues are collected between 61-90 days.

January monthly expenses are expected to be salaries $50,000, rent $4,000, depreciation $3,000 and $2,000 miscellaneous (not include interest nor depreciation expense). Expenses are paid in the month incurred. Equipment purchased on December 2×14, will be paid on next month since purchase. Note payable include a 12% annualized (at year) interest expense payable monthly and principal will be pay on October 2×15.

Tax rate is 40%. TAN use a Net Present Value (NPV) instead of Internal Rate of Return (IRR). Some sales pertain to October 2×14 still uncollected at Jan 2×15. Required: Answer correctly and present full calculation to attain credit for each answer. 1. Prepare the cash budget for Jan 2×15.

Value 25 pts. 2. Prepare the budgeted Income Statement for Jan 2×15. 25 pts. 3. Prepare the budgeted Balance Sheet for Jan 2X15. 35 pts. 4. Indicate the difference between NPV and IRR. 15 pts.