A Budgeted sales for each quarter and the year are as follows: For the year $835,000 1st quarter 27% 76% is generated from food sales 2nd quarter 23% 24% is generated from beverage sales 3rd quarter 20% 4th quarter 30% B Your fixed salaries for the year are $199,800 Your variable salaries expressed as a percentage of sales are 5.9% Your employee benefits program costs expressed as a % of total gross salaries 10.8% All salaries are paid in the quarter in which they are incurred. Employee benefits are accrued and paid in the quarter after the accrual. C Your quarterly fixed rent expense which is paid on the first of each quarter is $4,000 Your quarterly variable rent expense expressed as a percentage of sales is 5.0% Variable rent expense is accrued and is paid in the quarter after the benefit is received. D Your total sales are comprised of: Credit card sales 70% Cash sales 20% Sales on account 10% Your credit card commissions expense which is deducted by the financial institution is 2.5% Previous collection experience provides you with information on collection patterns as follows: Credit cards sales-in the quarter of sale 80% Credit card sales-in the quarter following sale 20% Sales on account are collected in the quarter following the sale. E The following other annual expenses have been given and are incurred evenly through out the year and are paid quarterly as incurred: Advertising and promotion 15,000 Miscellaneous 1,200 Bank charges 1,200 Office 1,200 Business tax and licenses 7,000 Professional fees 6,000 Delivery 1,200 Printing 4,000 Repairs and maintenance 4,000 Laundry and uniforms 7,000 Supplies 2,000 Telephone 2,400 Travel 2,000 F Utilities are paid quarterly and are incurred monthly as follows: Fixed $350 Variable 0.5% of Sales G Your initial bank loan (see opening Balance Sheet) was obtained at an interest rate of 12.0% and is paid each quarter along with the principal payment of $15,000 You are required to maintain a minimum quarterly cash balance of $9,000 You have negotiated an operating line of credit of $50,000 Your annual rate of interest on the operating line of credit is 18.0% You may borrow and repay loan amounts in increments of $1,000

H Depreciation on assets is as follows: Rate/Time Leasehold improvements Declining balance method 28% Kitchen and bar equipment Declining balance method 28% Furniture and Equipment Declining balance method 28% China and glass package Straight line method - no salvage value. 6 Years I Cost of sales for food expressed as a percentage of food sales is 40% Cost of sales for beverages expressed as a percentage of beverage sales is 25% The restaurant would like to maintain ending inventories based on an amount equal to a specific percentage of next quarters cost of sales: 15.0% for food 40.0% for beverages Combined projected food and beverage sales for the first quarter of year 2 are $250,000 All purchases of food and beverages are paid for as follows: In the quarter of purchase 67% ..In the quarter following purchase 33% J The opening account balances as of the beginning of the current fiscal year, January 1: Inventory-food $10,000 Interest payable $1,250 Inventory-liquor 7,000 R.Dewey, capital 61,946 Prepaid insurance 2,400 O.Cheetum, capital 61,946 Service deposits 2,450 B.Howe, capital 61,946 Leasehold improvements 352,000 M.E.Fine, capital 61,946 Kitchen and bar equipment 120,000 Accounts payable 17,000 Furniture and fixtures 115,000 Cash 10,800 China and glass package 8,000 Benefits payable 666 Operating line payable 10,000 Bank loan payable-long term 290,950 Bank loan payable-current 60,000 K It was decided that the restaurant would be called Dewey, Cheetum, and Howe - Fine Dining

References Total Year Sales 835000 1st Quarter Sales 27% 2nd Quarter Sales 23% 3rd Quarter Sales 20% 4th Quarter Sales 30% Food Sales 76% Beverage Sales 24% Total 1st Quarter sales of Year 2 250000 Total Credit Card Sales(CC) 70% Total Cash Sales 20% Sales on Account 10% Credit card cellection patterns In the quarter of sales 80% In the quarter following sale 20% Credit Card Commissions Expense 2.5%

QUESTION:

Prepare a cash budget for each quarter and for the year.