Preparing a Cash Budget
La Famiglia Pizzeria provided the following information for themonth of October:
Sales are budgeted to be $156,000. About 85% of sales is cash;the remainder is on account.
La Famiglia expects that, on average, 70% of credit sales willbe paid in the month of sale, and 28% will be paid in the followingmonth.
Food and supplies purchases, all on account, are expected to be$116,000. La Famiglia pays 25% in the month of purchase and 75% inthe month following purchase.
Most of the work is done by the owners, who typically withdraw$6,000 a month from the business as their salary. (Note:The $6,000 is a payment in total to the two owners, not perperson.) Various part-time workers cost $7,300 per month. They arepaid for their work weekly, so on average 90% of their wages arepaid in the month incurred and the remaining 10% in the nextmonth.
Utilities average $5,950 per month. Rent on the building is$4,100 per month.
Insurance is paid quarterly; the next payment of $1,600 is duein October.
September sales were $181,500 and purchases of food and suppliesin September equaled $130,000.
The cash balance on October 1 is $2,147.
Required:
If required, round your answers to the nearest dollar.
1. Calculate the cash receipts expected inOctober.
$
2. Calculate the cash needed in October to payfor food purchases.
$
3. Prepare a cash budget for the month ofOctober.
LaFamiglia Pizzeria Cashbudget Forthe month of October Beginning balance $ Cash receipts Cash available $ Less: Payments for food and suppliespurchases $ Owners' draw Workers' wages Utilities Rent Insurance Total disbursements $ Ending balance $
Preparing a Cash Budget
La Famiglia Pizzeria provided the following information for themonth of October:
Sales are budgeted to be $156,000. About 85% of sales is cash;the remainder is on account.
La Famiglia expects that, on average, 70% of credit sales willbe paid in the month of sale, and 28% will be paid in the followingmonth.
Food and supplies purchases, all on account, are expected to be$116,000. La Famiglia pays 25% in the month of purchase and 75% inthe month following purchase.
Most of the work is done by the owners, who typically withdraw$6,000 a month from the business as their salary. (Note:The $6,000 is a payment in total to the two owners, not perperson.) Various part-time workers cost $7,300 per month. They arepaid for their work weekly, so on average 90% of their wages arepaid in the month incurred and the remaining 10% in the nextmonth.
Utilities average $5,950 per month. Rent on the building is$4,100 per month.
Insurance is paid quarterly; the next payment of $1,600 is duein October.
September sales were $181,500 and purchases of food and suppliesin September equaled $130,000.
The cash balance on October 1 is $2,147.
Required:
If required, round your answers to the nearest dollar.
1. Calculate the cash receipts expected inOctober.
$
2. Calculate the cash needed in October to payfor food purchases.
$
3. Prepare a cash budget for the month ofOctober.
| LaFamiglia Pizzeria | |
| Cashbudget | |
| Forthe month of October | |
| Beginning balance | $ |
| Cash receipts | |
| Cash available | $ |
| Less: | |
| Payments for food and suppliespurchases | $ |
| Owners' draw | |
| Workers' wages | |
| Utilities | |
| Rent | |
| Insurance | |
| Total disbursements | $ |
| Ending balance | $ |
Related questions
Baird Company is a retail company that specializes in sellingoutdoor camping equipment. The company is considering opening a newstore on October 1, 2019. The company president formed a planningcommittee to prepare a master budget for the first three months ofoperation. As budget coordinator, you have been assigned thefollowing tasks:
Required
October sales areestimated to be $300,000, of which 40 percent will be cash and 60percent will be credit. The company expects sales to increase atthe rate of 20 percent per month. Prepare a sales budget.
The company expects tocollect 100 percent of the accounts receivable generated by creditsales in the month following the sale. Prepare a schedule of cashreceipts.
The cost of goods soldis 70 percent of sales. The company desires to maintain a minimumending inventory equal to 20 percent of the next monthâs cost ofgoods sold. However, ending inventory of December is expected to be$12,100. Assume that all purchases are made on account. Prepare aninventory purchases budget.
The company pays 80percent of accounts payable in the month of purchase and theremaining 20 percent in the following month. Prepare a cashpayments budget for inventory purchases.
Budgeted selling andadministrative expenses per month follow:
| Salary expense(fixed) | $ | 18,100 | |
| Salescommissions | 4 | % of Sales | |
| Suppliesexpense | 2 | % of Sales | |
| Utilities(fixed) | $ | 1,500 | |
| Depreciation onstore fixtures (fixed)* | $ | 4,100 | |
| Rent(fixed) | $ | 4,900 | |
| Miscellaneous(fixed) | $ | 1,300 | |
*The capital expenditures budget indicates that Baird will spend$119,400 on October 1 for store fixtures, which are expected tohave a $21,000 salvage value and a two-year (24-month) usefullife.
Use this informationto prepare a selling and administrative expenses budget.
Utilities and salescommissions are paid the month after they are incurred; all otherexpenses are paid in the month in which they are incurred. Preparea cash payments budget for selling and administrative expenses.
Baird borrows funds,in increments of $1,000, and repays them on the last day of themonth. Repayments may be made in any amount available. The companyalso pays its vendors on the last day of the month. It paysinterest of 2 percent per month in cash on the last day of themonth. To be prudent, the company desires to maintain a $13,000cash cushion. Prepare a cash budget.
October sales areestimated to be $300,000, of which 40 percent will be cash and 60percent will be credit. The company expects sales to increase atthe rate of 20 percent per month. Prepare a sales budget.
|
The company expects tocollect 100 percent of the accounts receivable generated by creditsales in the month following the sale. Prepare a schedule of cashreceipts.
|
The cost of goods soldis 70 percent of sales. The company desires to maintain a minimumending inventory equal to 20 percent of the next monthâs cost ofgoods sold. However, ending inventory of December is expected to be$12,100. Assume that all purchases are made on account. Prepare aninventory purchases budget.
|
The company pays 80percent of accounts payable in the month of purchase and theremaining 20 percent in the following month. Prepare a cashpayments budget for inventory purchases. (Round your final answersto the nearest whole dollar amounts.)
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Prepare a selling andadministrative expenses budget.
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Utilities and salescommissions are paid the month after they are incurred; all otherexpenses are paid in the month in which they are incurred. Preparea cash payments budget for selling and administrative expenses.
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Baird borrows funds,in increments of $1,000, and repays them on the last day of themonth. Repayments may be made in any amount available. The companyalso pays its vendors on the last day of the month. It paysinterest of 2 percent per month in cash on the last day of themonth. To be prudent, the company desires to maintain a $13,000cash cushion. Prepare a cash budget. (Any repayments/shortage whichshould be indicated with a minus sign.)
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