The board of directors of the Cortez Beach Yacht Club (CBYC) is developing plans to acquire more equipment for lessons and rentals and to expand club facilities. The board plans to purchase about $50,000 of new equipment each year and wants to begin a fund to purchase a $600,000 piece of property for club expansion.

The club manager is concerned about the club's capability to purchase equipment and expand its facilities. One club member has agreed to help prepare the following financial statements and help the manager ascertain whether the plans are realistic. Additional information follows the financial statements.

CORTEZ BEACH YACHT CLUB Statement of Income (Cash Basis) For the Year Ended October 31 Cash revenues Annual membership fees... Lesson and class fees.. Miscellaneous ... Total cash received... Cash costs Manager's salary and benefits..... Regular employees' wages and benefits... Lesson and class employees' wages and benefits... Supplies...... Utilities (heat and light). Mortgage interest Miscellaneous.. Total cash costs Cash income... Year 9 Year 8 $ 710,000 $600,000 468,000 4,000 360,000 3,000 $1,182,000 $963,000 $ 72,000 $ 72,000 380,000 380,000 390,000 300,000 32,000 31,000 44,000 30,000 70,200 75,600 4,000 3,000 $ 992,200 $891,600 $ 189,800 $ 71,400