You have been asked to develop a pro forma statement of cash flow for the coming year for Autumn Seasons, a 200-unit suburban garden apartment community. This community has a mix of 40 studio, 80 one- and 80 two-bedroom apartments with current rents of $550, $600, and $800, respectively. Leases with tenants are usually made for 12-month periods. Current rents are expected to remain fixed for the next six months. After that time, rents for each apartment type should increase by $10 per unit and remain at those levels for the remainder of the year. Ten studios were leased 3 months ago for $500, 20 one-bedroom units were leased 2 months ago for $580, and 10 two-bedroom units were leased last month for $805. All other units have been leased recently at current rents. All of the previously leased units also are on 12-month leases. When those leases rollover, all are expected to be renewed at market rents upon rollover for an additional 12 months. Presently, 4 studios, 6 one- and 6 two-bedroom units are vacant. This vacancy pattern should remain the same for the remainder of the year. Autumn Seasons anticipates that during the coming year, it will earn other income from laundry facilities, the awarding of an exclusive cable TV contract, parking, plus fees from net deposits, late fees, etc. of $200,000. Autumn Seasons expects to pay total turnover and operating expenses of $400 per month, per occupied unit during the next year. However, it expects to recover some of these expenses for heating and central cooling that it provides to tenants in an amount totaling $100 per month, per occupied unit. During the next year, it is also anticipatedthat $100,000 will be required for recurring, make-ready expenses (carpet, paint, drywall repair, etc.) and another $250,000 will be required for non-recurring items including countertops, parking lot repairs, etc. A total of $10,000 in fees will be paid to Apartment Locator Services, a company that provides marketing services and new tenants for Autumn.a. Prepare a statement of operating cash flow (NOI) for the coming year.b. Add to (a) anticipated outlays for recurring and non-recurring items and commissions. What will be the cash flow for the coming year?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

You have been asked to develop a pro forma statement of cash flow for the coming year for Autumn Seasons, a 200-unit suburban garden apartment community. This community has a mix of 40 studio, 80 one- and 80 two-bedroom apartments with current rents of $550, $600, and $800, respectively. Leases with tenants are usually made for 12-month periods. Current rents are expected to remain fixed for the next six months. After that time, rents for each apartment type should increase by $10 per unit and remain at those levels for the remainder of the year. Ten studios were leased 3 months ago for $500, 20 one-bedroom units were leased 2 months ago for $580, and 10 two-bedroom units were leased last month for $805. All other units have been leased recently at current rents. All of the previously leased units also are on 12-month leases. When those leases rollover, all are expected to be renewed at market rents upon rollover for an additional 12 months. Presently, 4 studios, 6 one- and 6 two-bedroom units are vacant. This vacancy pattern should remain the same for the remainder of the year. Autumn Seasons anticipates that during the coming year, it will earn other income from laundry facilities, the awarding of an exclusive cable TV contract, parking, plus fees from net deposits, late fees, etc. of $200,000. Autumn Seasons expects to pay total turnover and operating expenses of $400 per month, per occupied unit during the next year. However, it expects to recover some of these expenses for heating and central cooling that it provides to tenants in an amount totaling $100 per month, per occupied unit. During the next year, it is also anticipated
that $100,000 will be required for recurring, make-ready expenses (carpet, paint, drywall repair, etc.) and another $250,000 will be required for non-recurring items including countertops, parking lot repairs, etc. A total of $10,000 in fees will be paid to Apartment Locator Services, a company that provides marketing services and new tenants for Autumn.
a. Prepare a statement of operating cash flow (NOI) for the coming year.
b. Add to (a) anticipated outlays for recurring and non-recurring items and commissions. What will be the cash flow for the coming year?

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 13 images

Blurred answer
Knowledge Booster
Analytical Techniques
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education