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The Urban Dance Company (UDC) is a not-for-profit organization that puts on dance performances and offers dance courses. As UDC's financial manager, you are preparing

The Urban Dance Company (UDC) is a not-for-profit organization that puts on dance performances and offers dance courses. As UDC's financial manager, you are preparing for the upcoming fiscal year 2021, which will begin on July 1.

  1. You expect to begin FY21 with $55,000 in cash on hand.
  2. On July 1, UDC:
    1. Will purchase a furnished building which will house its performance and administrative offices for $2,000,000 by taking out a 40-year loan.
    2. The terms of the loan require:
      1. an annual interest payment of 3% of the outstanding balance on the first day of each fiscal year, and
      2. an annual principal repayment of $50,000 on the last day of each fiscal year.
    3. The building has a useful life of 40 years and no salvage value. UDC uses the straight-line depreciation method.
    4. Equipment bought in previous fiscal years will depreciate by $30,000 in FY21.
  3. UDC's staff will earn salaries equal to $100,000 per month (up from $95,000 per month in FY20) and
  4. Utilities will total $4,500 per month (up from $4,300 per month in FY20).
  5. Both salaries and utilities are paid with a one-month lag.
  6. Costumes will cost $100,000 in FY21. The expense for costumes will be incurred evenly throughout the year and paid in a timely fashion.
  7. The annual insurance premium of $20,000 is due on the first day of the fiscal year.
  8. UDC earns revenue from its dance courses. UDC:
    1. Offers one course each quarter (beginning July 1, October 1, January 1, and April 1 of each fiscal year).
    2. 100 students enroll each quarter.
    3. Charges tuition of $2,500 per student.
    4. Requires students to submit payment one week before the course begins.
    5. Has not raised its course fee in several years, but plans to raise the fee by 10% for courses that begin on or after July 1, 2021.
    6. Expects the number of students to remain unchanged despite the price increase.
  9. UDC:
    1. Will earn an estimated $700,000 in individual contributions in FY21;
    2. Expects to collect 40% of these contributions in the first half of the fiscal year and 60% in the second half.

Use the above information to prepare an annual operating budget and semiannual cash budget for UDC for FY21.

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