Triple-F Health Club (Family, Fitness, and Fun) is a not-for-profit family-oriented health club. The club's board of directors is developing plans to acquire more equipment and expand the club facilities. The board plans to purchase about $25,000 of new equipment each year and wants to begin a fund to purchase the adjoining property in four or five years. The adjoining property has a market value of about $300,000.
The club manager, Jane Crowe, is concerned that the board has unrealistic goals in light of its recent financial performance. She has sought the help of a club member with an accounting background to assist her in preparing for the board a report supporting her concerns.
The club member reviewed the club's records, including the following cash basis income statement. The review and discussions with Jane Crowe disclosed the additional information that follows the statement.

Additional information:
(a) Other financial information as of October 31, 20B:
Cash in checking account, $8,000
Petty cash, $300
Outstanding mortgage balance, $360,000
Accounts payable arising from invoices for supplies and utilities that are unpaid as of October 31, 20B, $2,500
(b) No unpaid bills are expected to exist on October 31, 20C.
(c) The club purchased $25,000 worth of exercise equipment during the current year 20B. Cash of $10,000 was paid on delivery, and the balance was due on October 1 but was not paid as of October 31, 20B.
(d) The club began operations six years ago in rental quarters. Two years later it purchased its current property (land and building) for $600,000, paying $120,000 down and agreeing to pay $30,000 plus 9% interest annually on November 1 until the balance is paid off.
(e) Membership rose 3% during 20B. This is approximately the same annual rate the club has experienced since it opened.
(f) Membership fees were increased by 15% in 20B. The board has tentative plans to increase the fees by 10% in 20C.
(g) Lesson and class fees have not been increased for three years. The board policy is to encourage classes and lessons by keeping the fees low. The members have taken advantage of this policy and the number of classes and lessons have grown significantly each year. The club expects the percentage growth experienced in 20B to be repeated in 20C.
(h) Miscellaneous revenues are expected to grow at the same percentage as experienced in 20B.
(i) Operating expenses are expected to increase. Hourly wage rates and the manager's salary will need to be increased 15% because no increases were granted in 20B. Towels and supplies, utilities, and miscellaneous expenses are expected to increase 25%.
Required:
(1) Construct a cash budget for 20C for Triple-F Health Club.
(2) Identify and explain any operating problem(s) that this budget discloses for Triple-F Health Club.
(3) Is Jane Crowe's concern that the board's goals are unrealistic justified? Explain.

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Triple-F Health Club Statement of Income (Cash Basis) For Years Ending October 31 (in thousands) 20B 20A Cash revenues: $355.0 234.0 一20 $591.0 $300.0 180.0 1.5 Annual membership fees..ttrr class tees. Miscellaneous... Total cash received $481.5 Cash expenses: Manager's salary and benefits.. Regular employees wages and benefits. Lesson and class employee wages and benefits.. Towels and supplies Utilities (heat and light Mortgage interest.. Miscellaneous $ 36.0 190.0 195.0 16.0 22.0 35.1 2.0 $ 36.0 190.0 150.0 15.5 15.0 37.8 1.5 $445.8 $ 94.9 35.7 Total cash expenses. $496.1