50.1K

Verified Solution

Link Copied!

The Gold Bay Hotel is in the process of developing a master budget and pro-forma (budgeted) financial statements for 2014. The beginning balance sheet for the fiscal year 2014 is estimated to be:

Gold Bay Hotel Estimated Balance Sheet 1/1/14

Cash $ 20,000 Accounts Receivable 30,000 Facilities 3,010,000 Accumulated Dep. (1,100,000) Total Assets $1,960,000

AccountsPayable $ 20,000 Notes Payable 500,000 Capital Stock 100,000 Retained Earnings 1,340,000 Total Equities $1,960,000

During the year the hotel expects to rent 30,000 rooms. Rooms rent for an average of $90 per night. The hotel expects to sell 40,000 meals during the year at an average price of $20 per meal. The variable cost per room rented is $30 and the variable cost per meal is $8. The fixed costs not including depreciation is expected to be $2,000,000. Depreciation is expected to be $500,000. The hotel also expects to refurbish the kitchen at a cost of $200,000, which is capitalized (included in the facility account). Interest of the note payable is expected to be $50,000 and $100,000 of the note payable will be retired during the year. The ending accounts receivable amount is expected to be $40,000 and the ending accounts payable is expected to be $30,000.

Required: Prepare budgeted statements of income and balance sheet for the end of the year.

Answer & Explanation Solved by verified expert

See Answer