Case Study #2 - Budgeting for the Not For Profit (Case Situation) The name of the not for profit organization is Family Support, They are a not for profit organization that has been in existence for 20 years. The organization operates in various cities throughout the province of Ontario providing assistance to families in need as a result of emergencies and disasters, and to the elderly that live alone and require assistance. You have been recently hired by the organization as the Budget Officer for the branch in Sault Ste. Marie, Ontario. A main task of the job is that you are required to prepare the budget for the next fiscal year ending December 31, 2023. The following Budget Items need to be considered when you prepare the budget for the year of 2023: Funding is received from the municipal, provincial and federal government. The municipal government provides $100,000 monthly at the end of each month, similar to the previous year. The province is projected to provide $2.4 million in 2023 while the federal government is to provide $600,000. The provincial funding is received on the first day of each quarter beginning with January 1. Each quarter receives an equal amount. Thus, the funding in January is for the months of January, February, and March. The federal government funding is received all in one lump sum on January 1st At the end of Fiscal 2022, the organization is expected to have an ending cash balance of $200,000. The budget is to be set up on a monthly basis. At the end of the 12 months, there is a total column that consolidates and totals all line items to a yearly summary for 2023. ibility Good to go a consolidates and totals all line items to a yearly summary for 2023. The organization receives rental revenue revenue of $5,000 per month from a tenant (another not for profit organization) that rents space in their building. The rent is received on the first day of the month. . In the 5th month, the organization intends to sell a piece of equipment for $20,000. In the 9th and 10th month, they plan to purchase fixed assets in the amount of $10,000 during each month. The monthly operating expenses are forecasted as follows: from January to May - $300,000 in each month, June to August - $320,000 in each month, and September to December - $290,000 in each month. Case Questions (Answer each question independent of each other) 1) Complete the monthly budget for each of the 12 months in 2023 given the above mentioned budget items. Then consolidate into a yearly summary. For each month, show all proceeds coming into the organization, the expenses, and net difference for each month. 2) If the organization intends to go through each line of the budget and attempt to justify the dollar amount of each line, what type of budget process is this and explain if this process would be applicable for Family Support. 3) Family support has 4 departments. Explain the benefits when the budget is prepared together with the business department managers instead of a budget prepared by solely the accounting department and the business departments are expected to operate within the budget, no questions asked. cessibility: Good to go 4) Once the budget is prepared and year 2023 commences, explain how you propose to monitor the budget each month against the actual results for each month. 5) In one of the departments, the department wants to purchase an item that was not in the original budget. The amount of purchase is $100,000. There is the money in the Bank for this purchase. What should the department do in regards to this $100,000 purchase? 6) The federal government has advised Family Support in March 2023 that they will no longer provide funding after 2023. Explain how you would react and the suggestions that you would provide to deal with this change in funding starting in 2024. 7) Explain the difference between the accrual methods when preparing the income statement versus the recognition of expenses on a cash basis. 8) If the organization sold excess computer equipment on July 15 for $25,000 and the sales agreement provided the buyer 60 days to pay, what month would the cash be received. Where in the financial statements is this $25,000 tracked, also specify the account that is used 9) What is the impact on the company's cash flow if the accounts receivable collection period increased from 30 days to 60 days? What strategies do you propose to help the organization to collect their accounts receivable earlier? 10) The company at the end of the year has a cash position of $100,000 and depreciation expense of $20,000, what is the net impact of the depreciation expense to the $100,000 cash