Techlabs operates a computer training center. The following data relate to the preparation of a master budget for January 2021. 

1. At the end of 2020, the company’s general ledger indicated the following balances: 

2. Tuition revenue in December 2020 was $80,000, and tuition revenue budgeted for January 2021 is $110,000. 

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 2020 reflects tuition earned in December 2020. 

4. Monthly expenses (excluding interest expense) are budgeted as follows: salaries, $60,000; rent, $4,000; depreciation on equipment, $8,000; utilities, $2,000; other, $800. 

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 2020 represents money owed for the purchase of computer equipment in December 2020. 

6. The company intends to purchase $50,000 of computer equipment in January 2021. The anticipated $8,000 per month of depreciation (see number 4) reflects the addition of $2,000 of monthly depreciation related to this purchase. 

7. The note is at 15 percent per annum and requires monthly interest payments of $750. The payments are made on the 20th of each month. The principal must be paid in February 2022. 

8. The tax rate is 20 percent. 

Required 

Complete the following budgets: 

a.

b.

c.

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Debits Credits Cash $ 60,000 $ 40,000 Accounts Payable Note payable Accounts receivable 40,000 60,000 Equipment (net) 120,000 Common stock 30,000 Retained earnings 90,000 Total $220,000 $220,000