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 $____________