Budgeting Project part 1 Background Information Provided by Your Client:

The Rocky Mountain Hotel, is a resort hotel is in Crested Butte, Colorado. For the hotel, management expects occupancy rates to be 95% in December, January, February and March; 85% in November and April; and 70% the rest of the year. This hotel has 325 rooms and the room rental is $250.00 per night. Of this, on average 10% is received as a deposit the month before the stay, 60% is received in the month of the stay, and 28% is collected the month after. The remaining 2% is never collected and assumed bad debt in the month after as a sales & general admin cost.

Most of the costs of running the hotel are fixed. The variable costs are only $40.00 per occupied room, per night. Fixed salaries (including benefits) run $400,000 per month, depreciation is estimated to be $360,000 a month, other fixed costs are $165,000 per month, and interest expense is $550,000 per month. Fixed, variable costs and salaries are paid in the month they are incurred, depreciation is only recorded at the end of each quarter and interest is paid semi-annually each June and December.

Financial statements should have proper heading, titles and format for the period they cover. You are making a presentation to a client. Summarize your answers & conclusions for each part in a textbox. The template is just an idea starter.

Project Part 1:

The client wants your accounting firm to prepare a detailed and summarized monthly cash budget for the Rocky Mountain hotel for the entire year. For simplicity, assume that there are 30 days in each month. Make sure you place proper headings and titles on your cash budget.