Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Triple - F Health Club ( Family , Fitness, and Fun ) is a not - for - profit, family - oriented health club. The

Triple-F Health Club (Family, Fitness, and Fun) is a not-for-profit, family-oriented health club. The clubs board of directors is developing plans to acquire more equipment and expand club facilities. The board plans to purchase about $25,000 of new equipment each year and wants to establish a fund to purchase the adjoining property in four or five years. The adjoining property has a market value of about $300,000.
The club manager, Jane Crowe, is concerned that the board has unrealistic goals in light of the clubs recent financial performance. She has sought the help of a club member with an accounting background to assist her in preparing a report to the board supporting her concerns.
The member reviewed the clubs records, including this cash-basis income statement:
TRIPLE-F HEALTH CLUB
Income Statement (Cash Basis)
For Years Ended October 31
20232022
Cash revenues:
Annual membership fees $ 373,000 $ 300,000
Lesson and class fees 237,900183,000
Miscellaneous 2,6001,500
Total cash revenues $ 613,500 $ 484,500
Cash expenses:
Managers salary and benefits $ 39,000 $ 36,000
Regular employees wages and benefits 193,000190,000
Lesson and class employees wages and benefits 198,000150,000
Towels and supplies 19,00015,500
Utilities (heat and light)25,00015,000
Mortgage interest 35,40037,800
Miscellaneous 3,5001,500
Total cash expenditures $ 477,500 $ 445,800
Increase in cash $ 136,000 $ 38,700
Other financial information as of October 31,2023:
Cash in checking account, $7,000.
Petty cash, $300.
Outstanding mortgage balance, $354,000.
Accounts payable arising from invoices for supplies and utilities that are unpaid as of October 31,2023, and due in November 2023, $4,000.
No other unpaid bills existed on October 31,2023.
The club purchased $25,000 worth of exercise equipment during the current fiscal year. Cash of $10,000 was paid on delivery, with the balance due on October 1. This amount had not been paid as of October 31,2023. An additional $25,000(cash) of equipment purchases is planned for the coming year.
The club began operations in 2022 in rental quarters. In October 2022, it purchased its current property (land and building) for $600,000, paying $120,000 down and agreeing to pay $31,500 plus 9% interest annually on the unpaid loan balance each November 1, starting November 1,2023.
Membership rose 3% in 2023. The club has experienced approximately this same annual growth rate since it opened and this rate is expected to continue in the future.
Membership fees increased by 15% in 2023. The board has tentative plans to increase these fees by 10% in 2024.
Lesson and class fees have not been increased for 3 years. The board policy is to encourage classes and lessons by keeping the fees low. The members have taken advantage of this policy, and the number of classes and lessons has increased significantly each year. The club expects the percentage growth experienced in 2023 to be repeated in 2024.
Miscellaneous revenues are expected to grow at the same rate as in 2023.
Operating expenses expected to increase:
Hourly wage rates and the managers salary: 15%.
Towels and supplies, utilities, and miscellaneous expenses: 25%.
Required:
1. Prepare a cash budget for 2024 for the Triple-F Health Club. (Round your "Growth %" column answers to 2 decimal places and your remaining answers to nearest whole dollar or percentage amount.)\table[[TRIPLE-F HEALTH CLUB],[Cash Budget],[For the Year Ending October 31,2024],[,2023,Growth %,\table[[Price],[Increase]],2024],[Operating Cash Inflows:,,,,,,,,],[Annual membership fees,$,373,000,,%,,%,,],[Lesson and class fees,,237,900,30.00,%,,%,,309,270],[Miscellaneous,,2,600,73.33,%,,%,,],[Total Operating Cash Inflows,$,613,500,,,,,$,309,270],[Operating Cash Outflows:],[Manager's salary and benefits,$,39,000,,%,15,%,$,44,850],[Regular employee wages,,193,000,,,15,,,221,950],[Lesson and class employee wages,,198,000,,,15,,,],[Towels and supplies,,19,000,,,25,,,23,750],[Utilities (heat and lights),,25,000,,,25,,,31,250],[,,,,,0,,,],[Miscellaneous,,3,500,,,25,,,4,375],[Total Operating Cash Outflows,$,477,500,,,,,$,326,175],[Net Operating Cash Flow,$,136,000,,,,,$,(16,905)]]
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Internationale Rechnungslegung IFRS Praxis

Authors: Author

1st Edition

3834909289, 9783834909282

More Books

Students also viewed these Accounting questions