On December 31, 2004, a small motel has a bank balance of $7,100.

On that same date its balance sheet showed that it had a bank loan payable of $73,900. The motel’s budgeted income statement is as follows for 2005:

Sales are 70 percent cash and 30 percent credit. Sales for November and December of each year are as follows:

The owner pays all expenses at the time they occur in order not to carry any accounts payable. However, the income tax for 2005 income will not be paid until March 2006. However, $9,800 for 2004 was paid in March 2005.
The motel owner plans to buy new furniture in May 2005 at an estimated cost of $15,600. By December 31, 2005, the bank loan payable will have been reduced to $49,200. Calculate the motel’s bank balance at December 31, 2005. Collections on credit revenue average 90 percent in the month following the sales and the remaining 10 percent in the month following.

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Sales revenue Operating costs $403,900 (302,300) $101,600 Other expenses: Management salary expense $23,000 Building rent expense 18,500 Insurance expense 2,400 Interest expense 7,600 Furniture depreciation expense 9,700 ( 61,200) Operating income $ 40,400 Income tax ( 10,100) Net income $ 30,300