5.

A new restaurant was incorporated on 1^st January 2019.

Forty thousand shares were issued and sold for $6 per share. The cash received from the sale of shares was used as follows:

Building with estimated life of 20 years $120000

Kitchen & restaurant FF&E with estimated life of 10 years. $ 90000

China, silverware, etc. with an estimated life of 5 years $ 18000

Food & beverage inventories $ 7000

The remaining cash was deposited in the bank account.

The following estimates were made about the volume of business and operating expenses for the first 3 months of operation.

1. Sales revenue for January $30200, February $60800, and March $90400.
2. Sales revenue will be 55% cash and 45% credit; maximum credit to be allowed is 30 days.
3. Food and beverages costs will average 38% of the total sales revenue. 40% of this cost will be paid during the month of operation and the remaining 60% will be paid in the month following.
4. Wages & salaries: the fixed portion of wages will be $5200 per month and the variable portion will be 30% of any sales revenue in excess of $25000 a month. Total wages & salaries are paid in the month they are expensed.
5. Other operating costs will be $3800 per month, to be paid in the month following the incurrence of the cost.
6. Depreciation for the building, FF&E, China, etc. will be calculated with the straight-line method (no residual value). Monthly depreciation is expensed.
7. Because of the increase in sales revenue, the owner plans to increase the restaurants inventory by $2000 in February and another $2000 in March.

Required:

1. A monthly budgeted income statement for the three months ending 31^st March.
2. A cash budget for each of the first 3 months of 2019.
3. A balance sheet at the end of March 2019.