Prepare Cash Budget and Operating Budget using the information below:

Murray Water World Park operates a water slide park outside of Alberta. Sean is in bind since his brother Jim has unexpectedly left the company to pursue a different career. Sean asks help from you since you are the cashier in preparing the cash budget and the operating budget.

The park is open from May through September and 60% of its sales are paid in cash, 30% are paid by credit card and 10% are school groups that are billed to the school's divisions. Credit card companies deposit payment to Murray's corporate bank account the same day less a 1% processing fee. Admission fees billed to school groups are paid the following month. All expenses are paid the month they are incurred.

2021 Operating Year Projections

May June July August September

Sales $ 160,000 $ 210,000 $ 300,000 $ 300,000 $ 250,000

Staff costs $ $(43,200) $ (56,700) $ (81,000) $ (81,000) $ (67,500)

Operating Expenses $ (54,400) $ (71,400) $ (102,000) $ (102,000) $ (85,000)

Depreciation $ (13,000) $ (13,000) $ (13,000) $ (13,000) $ (13,000)

Interest Expense $ (5,000) $ (6,000) $ (6,000) $ (4,000) $ -

Pool supplies

Expected attendance 6,880 9,030 12,900 12,900 10,750

Jim left before completing the pool supply line. Sean tells you that the park uses balanced chlorine kits to maintain the pools and slides at a cost of $250 per kit and the number needed is based on anticipated usage. He expects to use 10 in May, 20 in June, 40 in July, 40 in August and 20 in September but always wants to have 10% of next month's requirements on hand "just in case". There are 10 kits currently in inventory and he would like to have at least 5 kits at the end of the year. In addition, Sean tells you that they will need to make repairs to slides four and six in May at an estimated total cost of $125,000 (assume that this is classified as an expense). He also needs to pay $50,000 per operating month on the long-term loan (held by the previous owners - his parents who sold the business to him when they retired) and wants to pay a dividend in the amount of $25,000 each operating month, which he receives in lieu of a salary. Sean has a $500,000 line of credit that can be drawn on for short-term financing. The line of credit balance is currently at zero and 5% annual interest is paid the month following borrowing on the outstanding balance at the end of the month; any excess cash is immediately used to pay down the line of credit. The cash balance is currently $40,000. He would like you to analyze and explain the concepts of liquidity, solvency and profitability in a short report that includes your conclusions and any recommendations for improvement. He is particularly interested if there is a way to generate more cash from the business.