updated accounting homework The mangers of ABC COMPANY of a local organization is considering starting an income generating project The Board of Directors asked the accountant to help in preparing an operating budget including a cash budget for the six months ending 31 12 22020 The Board of Directors has promised to secure $100,000 for this project if it proves to be profitable The accountant collected the following data $100,000 is expected to be secured by the Board of Directors and the project will start on 1 7 2020 A building will be rented at an annual rent fee of $24,000 It is expected that the rent of the first three months will be paid in advance It is expected that utilities will be $5,000 per quarter payable at the beginning of the following quarter Equipment will be purchased for $79,200 50 will be paid at the time of purchase i e in July 2020 and 50 in October 2020 The estimated useful life of this equipment is 4 years Furniture will be purchased for $4,080 in July 2020 The estimated useful life of this equipment is 2 years A vehicle will be purchased for $8,160 in July 2020 Annual insurance is $1,500 payable in July 2020 The estimated useful life of the vehicle is 4 years It is estimated that raw materials usage will average $25,000 monthly It is also estimated that purchases of raw materials will be $50,000 in July 2020, $60,000 in September 2020, and $60,000 in November 2020 It is expected that the payment of supplies will be made in the month following the purchase Salaries are expected to be $2,000 month for the first quarter and $3,000 per month for the second quarter Other operating expenses are estimated at $2,500 per month Market analysis showed the following sales estimates Sales will be on credit with collections after 2 months of sales July 16 Aug 16 Sept 16 Oct 16 Nov 16 Dec 16 Estimated Sales in $ 0 20,000 30,000 50,000 100,000 100,000 Required Prepare in good form a A profit and loss budget for the 6 months ending 31 12 2020 b A balance sheet budget as at 31 12 2020 c A cash flow budget for the 6 months ending 31 12 2020 d As a Board of Director Member would you approve to fund the project Why

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updated accounting homework The mangers of ABC COMPANY of a local organization is considering starting an income generating project. The Board of Directors asked the

updated accounting homework

The mangers of ABC COMPANY of a local organization is considering starting an income generating project. The Board of Directors asked the accountant to help in preparing an operating budget including a cash budget for the six months ending 31/12/22020. The Board of Directors has promised to secure $100,000 for this project if it proves to be profitable.

The accountant collected the following data :

$100,000 is expected to be secured by the Board of Directors and the project will start on 1/7/2020.
A building will be rented at an annual rent fee of $24,000. It is expected that the rent of the first three months will be paid in advance.
It is expected that utilities will be $5,000 per quarter payable at the beginning of the following quarter.
Equipment will be purchased for $79,200. 50% will be paid at the time of purchase i.e. in July 2020 and 50% in October 2020. The estimated useful life of this equipment is 4 years.
Furniture will be purchased for $4,080 in July 2020. The estimated useful life of this equipment is 2 years.
A vehicle will be purchased for $8,160 in July 2020. Annual insurance is $1,500 payable in July 2020. The estimated useful life of the vehicle is 4 years.
It is estimated that raw materials usage will average $25,000 monthly. It is also estimated that purchases of raw materials will be $50,000 in July 2020, $60,000 in September 2020, and $60,000 in November 2020.
It is expected that the payment of supplies will be made in the month following the purchase.
Salaries are expected to be $2,000/month for the first quarter and $3,000 per month for the second quarter.
Other operating expenses are estimated at $2,500 per month.
Market analysis showed the following sales estimates. Sales will be on credit with collections after 2 months of sales.
July 16

Aug 16

Sept 16

Oct 16

Nov 16

Dec 16

Estimated Sales in $

0

20,000

30,000

50,000

100,000

100,000

Required: Prepare in good form

a. A profit and loss budget for the 6 months ending 31/12/2020.

b. A balance sheet budget as at 31/12/2020

c. A cash flow budget for the 6 months ending 31/12/2020.

d. As a Board of Director Member would you approve to fund the project. Why?