Question 1) Cash Budgeting

As the owner of Indoor Racing Ltd, you wanted to prepare the cash forecast for Jan, Feb, and March of 2018.

Historical Sales:Dec $200,000

Predicted Sales:Jan $220,000, Feb $250,000, Mar $270,000, Apr $340,000

Sales:70% cash sale, 30%collected 1 month later

Supplies (gasoline, tires, parts, lubricants and other consumables) are paid for 1 month before sale.Supplies are valued at 20% of sales price

Purchase new Go-Karts paying $40,000 in Jan and another $20,000 in Feb

Operating Expenses (monthly) are paid in the month incurred

(Rent $50,000, Utilities $25,000, Salary $75,000, Insurance $20,000, Depreciation $10,000)

Cash Balance must be minimum of $10,000

Beginning Cash on Jan 1is $30,000

MONTHLY CASH FORECAST:

Jan

Feb

Mar

OPENING CASH BALANCE

CASH IN-FLOWS:

TOTAL CASH AVAILABLE

CASH OUT-FLOWS:

TOTAL CASH OUT-FLOWS

CASH BALANCE (before loan)

BORROWING (LOAN)

CASH BALANCE (after loan)

Question 2)Financial Statements

Small Boat Tours

Trial Balance

December 31, 2017

Debit Credit

Cash$63,000

Accounts Receivable 33,400

Prepaid Insurance7,500

Supplies11,600

Land45,000

Equipment (net)128,500

Accounts Payable25,000

Note Payable72,000

Common Shares30,000

Retained Earnings34,000

Dividends19,000

Tour Revenue514,000

Salary Expense178,000

Fuel Expense120,000

Depreciation Expense20,000

Utilities Expense18,500

Insurance Expense30,500 _______

Total$675,000$675,000

Listed above is the unadjusted Trial Balance for the year ending Dec 31, 2017.

Required:in the space provided, prepare the Financial Statements for Small Boat

Tours for the fiscal year ending Dec 31, 2017.Remember to include proper heading

for each of the statements.

I)I/S(5 marks)

II)R/E(2 marks)

III)B/S(5 marks)

Question 3) Break-Even Point

Deadly Adventures Inc. provides guided Wingsuit base-jumping tours in the Canadian Rocky Mountains.Each customer (jumper) is provided with the use of a wingsuit and a personal instructor for each jump.Listed below are the financial details of its operations:

Selling Price per Jump (4 hour tour)$400

Instructor Cost per Jump 100

Transportation Cost per Jump50

Lunch per Jumper15

Sales Commission per Jump35

Deadly Adventures incurs the following monthly fixed operating costs:

Office Rent$2,000

Advertising Expense 500

Depreciation Expense (Equipment)500

Insurance Expense4,000

Salary Expense5,000

Required:

a)Calculate the Contribution Margin and the Contribution Margin Ratio(2 marks)

b)Determine the Break-Even Point (in units) per month.(2 marks)

BEP(u)=FC/CM(u)

c)How many jumps must Deadly sell to earn monthly profits of $10,000 (2 marks)

d)Next year Deadly is considering changing the jumps to an 8 hour tour to allow for 2 jumps per customer.In doing so, the selling price will be $700.Instructor cost goes up to $200 while transportation costs will double.Lunch cost will also go up to $30.All other costs remain the same.What will the new Break Even Point (units) be?(2 marks)