Problem 10.3 (LO2) Master Budget Techlabs operates a computer training center. The following data relate to the preparation of a master budget for January 2021. At the end of 2020, the companys general ledger indicated the following balances: Debits Credits Cash $ 60,000 Accounts Payable $ 40,000 Accounts receivable 40,000 Note payable 60,000 Equipment (net) 120,000 Common stock 30,000 Retained earnings 90,000 Total $220,000 $220,000 Tuition revenue in December 2020 was $80,000, and tuition revenue budgeted for January 2021 is $110,000. Fifty percent of tuition revenue is collected in the month earned, and 50 percent is collected in the subsequent month. The receivable balance at the end of 2020 reflects tuition earned in December 2020. Monthly expenses (excluding interest expense) are budgeted as follows: salaries, $60,000; rent, $4,000; depreciation on equipment, $8,000; utilities, $2,000; other, $800. Expenses are paid in the month incurred. Purchases of equipment are paid in the month after purchase. The $40,000 payable at the end of 2020 represents money owed for the purchase of computer equipment in December 2020. The company intends to purchase $50,000 of computer equipment in January 2021. The anticipated $8,000 per month of depreciation (see number 4) reflects the addition of $2,000 of monthly depreciation related to this purchase. The note is at 15 percent per annum and requires monthly interest payments of $750. The payments are made on the 20th of each month. The principal must be paid in February 2022. The tax rate is 20 percent. Required Complete the following budgets: Techlabs Cash Budget for January 2021 Cash receipts Collection of December 2020 tuition $ Collection of January 2021 tuition Total cash receipts Cash disbursements Payment of salaries Payment of rent Payment of utilities Payment of other expenses Payment for purchases of computer equipment Payment of interest on note Payment of taxes Total disbursements Excess disbursements over receipts Plus beginning cash balance Ending cash balance $ Techlabs Budget Income Statement for January 2021 Tuition revenue $ Less: Salaries Rent Utilities Depreciation Other Interest expense Total expense Income before taxes Taxes on income Net income $ Techlabs Budgeted Balance Sheet as of January 31, 2021 Assets Cash $ Accounts receivable Equipment (net) Total assets $ Liabilities Accounts payable $ Note payable Total liabilities $ Stockholders equity Common stock Retained earnings Total stockholders equity Total liabilities and stockholders equity $

Techlabs Cash Budget for January 2021 Cash receipts Collection of December 2020 tuition S Collection of January 2021 tuition Total cash receipts Cash disbursements Payment of salaries Payment of rent Payment of utilities Payment of other expenses Payment for purchases of computer equipment Payment of interest on note Payment of taxes Total disbursements Excess disbursements over receipts Plus beginning cash balance Ending cash balance Techlabs Budget Income Statement for January 2021 Tuition revenue $ Less: Salaries Rent Utilities Depreciation Other Interest expense Total expense Income before taxes Taxes on income Net income Techlabs Budgeted Balance Sheet as of January 31, 2021 Assets Cash $ Accounts receivable Equipment (net) Total assets $ Liabilities Accounts payable $ Note payable Total liabilities $ Stockholders' equity Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity s