Assignment #5

The Center for Performing Arts leases from the U.S. Government, a Concert Hall, at an annual rate of $60,000, payable on the 15th day of each month. The Center had remained "dark" during the month of December, 2007 until the day of January 1, 2008 (a Tuesday night opening) of The Brooklyn Ballet, which is scheduled into the Center's Concert Hall for six performances running through Sunday evening, January 6, 2008. However, its full staff remained on payroll during each week in December, both Front-of-House and Back-of-House, at a gross salary cost of $1,500 weekly. Its Balance Sheet at December 23, 2007:

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ASSETS:
    Current:
        Cash in Box Office and in Banks .............................$10,000
        Receivable from Patrons (due $1,000 weekly) .................$10,000
        Receivable from Charges	...........................................0
        Security Deposit expected to be returned on Jan. 14, 2008 ...$25,000
    Total Current Assets ....................................................$45,000

    Non-Current:
        Theatrical Equipment and Furniture  ........................$167,890
        Renovation Costs of Concert Hall (per lease requirement) ...$235,606
                                                                    ________
        Total Fixed Costs ..........................................$403,496
        Less: Accumulated Depreciation...............................$61,496
                                                                    ________
    Net Fixed Depreciable Assets ............................................$342,000
    
Total Assets ..........................................................................$387,000


LESS: LIABILITIES:
    Box Office Sales for 2008 Productions (unearned) .................$5,000
    Accounts Payable - all due on January 14, 2008 ...................$1,000
    Short Term Notes Payable ..............................................0
    Withholding and other payroll taxes payable (due 1/15) ...........$2,300
    
Total Liabilities .......................................................................$8,300



Total Stockholder's Equity ............................................................$378,700

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Performance Schedule and estimate of box office gross sales are:
(all weeks begin on Monday and end on Sunday)

Week Ending 1/6/08	The Brooklyn Ballet (6 performances)	$25,000
Week Ending 1/13/08	Luzon Lady (8 performances)	$40,000
Week Ending 1/20/08	One Man Magic Show (12 performances)	$25,000
Week Ending 1/27/08	Langly Bros. Circus (one night)	$7,500
Week Ending 2/3/08	dark except for two "one night specials"**	$10,000

**On Monday, January 28th and on Saturday, February 2nd, the Hall has been rented to an outside performing group at a rental of $5,000 per night ("one night specials"). There are no extra costs associated with these two bookings (except for the regular employed staff and the regularly - recurring overhead).

The cash received at the Center's Box Office is usually collected as follows (based upon past experience) :

• 70% during the performance week
• 10% in the week prior to opening
• 10% during the week two weeks prior to opening
• 10% of sales are made against credit cards: (Visa, Mastercard and American Express), and are collected at an average of 3 weeks after performance, and at a discount of 6% of face value.

The Brooklyn Ballet is contracted for a flat fee of $27,500. No additional costs over the staff of the Center, and its continuing overhead.

Luzon Lady is a new production mounted by the Center which is scheduled to commence rehearsals on Monday, December 24, 2007 and to rehearse for two weeks prior to scheduled opening on January 7, 2008 and play 8 performances during the week ended at January 13, 2008. Salary costs of actors, director and stage manager runs $7,900 per week during rehearsals and $10,000 weekly during the playing weeks. The props, scenery, costumes and other physical requirements of the show cost $35,000 and all must be paid no later than January 14, 2008. The royalty due the author is 10% of actual gross receipts against a minimum of $2,500 weekly (which minimum must be paid one week before opening). Luzon Lady is scheduled to start a tour of America and Asia on January 26, 2008, after a thirteen day lay-off agreed upon in all contracts. Salaries for the one night of Saturday, January 26th, and all future salaries and costs associated with the tour are to be paid by Management Bookings Inc., which has purchased the rights and the rehearsed company from the Center for a weekly fee of $12,500, payable each Monday at the commencement of each full playing week; plus $2,500 for the Saturday night engagement of January 26th.

The deal for Mr. Magic and his show for the week ended January 20th calls for a guaranteed payment in the form of a fee to him of $6,000 vs. 40% of the gross receipts, payable on his closing night, in cash. Circus Night costs $2,000 plus one-half of the gross receipts.

The Center's costs for overhead, i.e., office, box office, telephone, etc., totals $1,000 weekly. Depreciation of equipment is charged to weekly operations at the rate of $333.00 per week, lit or dark. Sundry operating expenses (such as theatrical supplies) cost $50.00 per performance, and are payable less a 2% discount by the tenth of the month following use.

Payroll withholding taxes of 33% of gross salaries, plus 7% of gross for employers' share of social security (FICA) taxes is payable by depository receipt to their local bank 10 days after each Saturday payday. The income from the Center's snack bar nets about 10% of box office gross, and program sales about 2% of box office gross. The snack bar and program sales for the two one-nighters during the week of February 2nd are expected to produce about $350 per performance. However, the Circus Night there will be no program sales as the lease contract says that Langley Bros. shall have exclusive rights to programs.

On January 14, 2008 the Center is committed to put up a $50,000 deposit with Theatrical Scene Designs, Inc., with which it has contracted to build sets and costumes for a new opera which the Center is going to produce in June, 2008. The estimated cost of the physical production is going to total about $125,000. In addition, on January 23, 2008, they are obligated to pay United Scenic Artists (Union) a security deposit of $15,500 to cover the contract they will then sign with Deacon Dross, the scene designer they have engaged to supervise the set construction. (He will receive his fee of $15,000 from the U.S.A. upon satisfactory completion of the sets at Theatrical Stage Designs shop.

The Center has budgeted the following for advertising of their various productions and presentations:

• The Brooklyn Ballet: all paid for except for $1,400 in newspaper ads bill due on January 14, 2008.
• Luzon Ladies: a total of $8,500. Payable $1,500 on December 28, 2007; and $5,500 on January 2, 2008; and $1,500 on January 10, 2008.
• Magic Show: $2,850, of which $1,850 is alread paid; and the balance should be paid no later than January 17, 2008.
• The Circus Night advertising bills contracted for aggregate $10,000; of which the Center's share is 25% and the Langley Bros.' share is 75%.
• The One Nighters advertising is strictly the obligation of the persons who have leased the Hall for those nights. (And they get to keep all the box office grosses for those two nights.)

The Center's Box Office is selling seats for each of the two One-Nighters; however, by agreement, the funds so collected are turned over to a joint bank account, and the Center's rent will come out of that account as a first claim, the balance going to the performing groups.

The Center's attorney advises them that Ms. Macy Williams' lawsuit against the Center for an accident she allegedly had in the Hall, and which she is suing the Center, should be settled out-of-court for a negotiated amount of $4,400, on January 25, 2008. Otherwise, the Center will have to incur the expenses of defending an expensive court action. They usually go along with their attorney's counsel.

THEATRE LEASE FOR ONE-NIGHTER The Flatbush Flatboat Owners Club (hereinafter called the tenant) leases the Center for the Performing Arts' Playhouse Hall, (hereinafter called the Theatre) for a fixed rental of $5,000 for the evening of January 28, 2008 from 6 pm that date. The Theatre agrees to provide the Hall, cleaned, heated and unoccupied to the Tenant. The Theatre agrees to sell the Tenants' box office tickets (which the Tenant will furnish at its sole cost and expense) for the two weeks prior to the date of the engagement from its box office, and to provide adequate box office personnel for this service at the normal hours of its operation, at no cost to the tenant. The $5,000 rent shall be paid $1,000 upon the signing of this agreement; and the $4,000 balance no later than 6:00 pm on the day following rental date. The Tenant warrants that it will not permit any salacious or illegal acts on the Theatre's stage; and that it will vacate the Hall by 11:00 pm that night. The Theatre will provide, at no cost to the tenant, appropriate ushers, house manager, stage hands, electricity and heat and hall-cleaning. The Theatre reserves the sole right to sell any food, drink or programs in the Hall on the night of this engagement. The Theatre agrees to turn over to the Tenant the exact cash reflected on its box office statement for this engagement, no later than 11:00 pm on the night of the performance. Tenant agrees that all personnel appearing on stage, stage settings, props, furniture and costumes, shall be provided by the Tenant at its sole cost and hold the Theatre harmless for all claims of creditors for such deliveries. Signed this 28th day of December, 2007. ______________________________ _______________________________ Alix Bonnie Charmin F. Flathead President Treasurer Center for the Performing Arts Flatbush Flatboat Owners Club [Assume contract for other one-nighter is basically the same (except rental date) and also signed on 12/28/2007.]

REQUIRED:

• Prepare a weekly cash budget for each of the weeks from the one commencing December 24, 2007 (and ending on Sunday, December 30, 2007) through the week ending February 3, 2008 (a total of six weeks). Show total cash flow and end-of-week cash balances or deficits. Also all details of cash "In" and "Out." If you have a cash deficit or surplus at any time, explain what you will do about it.
• Prepare a Balance Sheet as of February 3, 2008.