Stall Company is a newly incorporated company providing engineering services.
The company has a January 1 to December 31 reporting cycle. You have been hired
to assist the accountant with a number of budget related tasks relating to 2019.
USE WORKSHEET BELOW
(a)	Prepare a 2019 ANNUAL BUDGET based on the following information: (4 marks)
	A	Sales are anticipated to be $12,000 per month for the first 6 months of 2019 and
		increase to $16,000 per month for the remaining months of the year
	B	The company rents a portion of it's office space to a legal firm. Rental income
		will be $2,000 per month from January 1 to September 30, 2019. A 10% increase
		in rent will occur on October 1, 2019
	C	Four salaried staff have been hired to start work on January 1, 2019 (2 staff will
		each be paid $35,000 per year and 2 staff will each be paid $25,000 per year).
	D	Staff benefits equal to 15% of salary will be paid
	E	Other annual operating expenses are estimated to be as follows:
		Wages	$ 4,000
		Materials and supplies	10,000
		Utilities	6,000
		Insurance	7,200
		Advertising	7,200
		Contracted services	4,000
		Travel	6,000
		Training	2,000
(b)	Allocate the annual budget prepared in (a) over four quarters of the year based on the
	following allocation data: (4 marks)
	A	Sales - 20% of sales will be made in each of quarter 1 and quarter 2 with 30%
		of sales in each of quarter 3 and 4
	B	Rent - earned as anticipated in part (a) above
	C	Salaries and benefits paid equally each month throughout the year
	D	Wages - a summer student will be hired for July and August and paid equally
		over the two months
	E	Materials and supplies - 50% will be purchased in January, 20% in June and 30%
		in December
	F	Utilities and insurance - expense incurred equally over the 12 months of the year
	G	Advertising - incurred 50% in May and 50% in September
	H	Contracted services - incurred in December
	I	Travel - expense incurred equally each month of the year
	J	Training - 2 staff will be attending a course in April
(c)	Prepare a budget variance report as of June 30 (end of the second quarter). Actual
	results recorded in the accounting system are as follows. Are there any significant
	budget variances that the accountant should be made aware of? (3 marks)
		Sales		$ 69,000
		Rental income		11,000
		Salaries		55,000
		Benefits		7,000
		Wages		-
		Materials and supplies		6,000
		Utilities		4,000
		Insurance		3,600
		Advertising		5,000
		Contracted services		-
		Travel		4,000
		Training		2,000
(d)	What will the cash balance be as of December 31, 2019 given: (3 marks)
	(COMPLETE BELOW)
	A	The cash balance at January 1, 2019 was $20,000
	B	Actual revenues and expenses for January 1, 2019 to June 30, 2019 are given in
		part (c) above
	C	Actual revenues and expenses for the third and fourth quarters were the same
		as the budget allocations calculated in part (b) above. Show total receipts,
		total disbursements and cash balance for each quarter.
			Quarter
			1 and 2	Quarter 3	Quarter 4
		Cash balance - Jan 1/2019
		Add: Receipts
		Less: disbursements
		Cash balance