Question

The Gold Bay Hotel is in the process of developing a master budget and Pro-forma financial statements. The beginning balance sheet for the current fiscal year is estimated to be

Gold bay Hotel Estimated Balance sheet current year

Cash	$ 20,000	Accounts payable	$ 20,000
Accounts Recievable	30,000	Notes payable	500,000
Facilities	3,010,000	Capital stock	100,000
Accumulated Dep	(1,100,000)	Retained Earnings	1,340,000
Total assets	$ 1,960,000	Total Equities	$1,950,000

During the year the hotel expects to rent 30,000 rooms. Rooms rent for an average of $ 90 per night. The hotel expects to sell 40,000 meals during the year at an average price of $ 20 per meal. the variable cost per room rented is $ 30 and the variable cost per meal is $8. The fixed costs not including depreciation is expected to be $ 2,000,000. Depreciation is expected to be $ 500,000. The hotel also expects to refurbish the kitchen at a cost $ 200,000. Which is capitalized ( included in the facility account). Interest of the note payable is expected to be $ 50,000 and $ 100,000 of the note payable will be retired during the year. The ending accounts receivable amount is expected to be $ 40,000 and the ending account payable is expected to be $ 30,000.

Required

Prepare Pro-forma financial statement for the end of the current year.

Answer 1

Answer:- expected sales

Room rents (30000)($90/room) $270000

Meals (40000)($20/meals) $800000

Total sales $3500000

Variable cost

Rooms (30000)($30 rooms) $900000

Meals (40000)($8/meals) $320000

Total costs $ 1220000

Gold Bay hotel

Income Statement current year

Sales. $3500000

Variable cost $1220000

Fixed cost(not including Depreciation). $2000000

Depreciation. $ 500000  

Interest expense. $50000

Expected loss. $270000

Gold bay Hotel Cash flow statement

Cash flow from operation :

Net loss. ($ 270000)

Depreciation $500000

Increase in Account Receivable ($10000)

Increase in accounts payable. $ 10000   

Total. $230000

Cash flow from investment :-

Refurbish kitchen ($200000)

Cash flow from finance :-

Retirement of Note ($100000)

Net Cash outflows. ($70000)

Beginning Cash balances. 20000

Ending Cash balances. 50000

Gold Bay Hotel Balance sheet

Estimated 12/31 current year .

Assets. $. Liabilities $

Cash. (50000). Account payable. 30000

Account

Receivable. 40000. Notes payable. 400000

Facilities. 3210000. Capital stocks. 100000

Accumulated. Retained

Depreciation. (1600000). earnings 1070000

Total Assets. 1600000. Total Liabilities. 1600000