The Columbia Arena Company formed in 2015 and uses the accrual basis of accounting. Using the company’s 2015 budget, provided in Exhibit 6.10, develop a pro forma operating budget for 2016 based on the following revenue and expense estimates:

a. It is forecasted that costs and expenditures will change in 2016 as follows:

. Merchandise COGS, G&A, Event Costs, and Maintenance will increase by 2.5%.

. Concessions COGS will increase by 4.5%.

. Utilities will increase by 8.0%.

. Personnel will increase by 2.5%.

. Insurance, Contract Services, Marketing, Management Fee, and Reserve are forecasted to remain the same.

b. The arena is expected to generate cash receipts in 2016 as follows:
. All rent will increase by 5.5%.

. Concessions Gross will increase by 4.0%.

. Merchandise Gross, Suite Revenue, Club Seating Revenue, Advertising Revenue, and Naming Rights are forecasted to remain the same.

. Box Office, Parking, and Ticket Fee revenues will decrease by 2.3%.

Exhibit 6.10   Sample budget for Practice Problem 1.

Transcribed Image Text:

COLUMBIA ARENA COMPANY 2015 OPERATING BUDGET