B E F The Tri Town Restaurant is situated in a local shopping center and serves food of many different cultures. It also caters private functions for companies. The results of operations for the fourth quarter of 2020 are as follows: Sales $480,000 Less cost of sales 331,200 Gross margin 148,800 Less selling, general, and administrative expenses 57,600 Income before taxes 91,200 Less income taxes Net income 18,240 $72,960 Additional information: Sales and cost of sales are expected to increase by 15 percent in each of the next two quarters. G H I J Cash receipts Collections of sales Quarter 4,2020 collections Quarter 1, 2021 collections Total cash receipts Cash disbursements 2. 80 percent of sales are collected in the quarter of sale and 20 percent are collected in the quarter following sale. Payment for inventory purchases 3. The balance in accounts receivable at the end of 2020 relates to sales in the fourth quarter of 2020. 4. Food purchases in the fourth quarter of 2020 are $333,100. Quarter 4, 2020 payments 5. The balance in accounts payable at the end of 2020 relates to purchases in the fourth quarter of 2020. 6. Food inventory at the end of 2020 is $16,320. For 2021, the company plans to hold ending inventory equal to 30 percent of the subsequent quarter's cost of sales. Quarter 1, 2021 payments 7. Selling, general, and administrative expenses are expected to increase by $11,520 due to increases in advertising and salaries. All other expenses in this category are expected to remain constant. Selling and adm. expenses 8. 9. 75 percent of inventory purchases are paid in the quarter of purchase and 25 percent are paid in the following quarter. All other expenses, including taxes, are paid in the quarter incurred. Selling and administrative expense includes $4,800 of depreciation related to fixtures and equipment with a book value (net of accumulated depreciation) of $57,600 at the end of 2020. 10. The tax rate is expected to remain at 20 percent and taxes are paid in the quarter incurred. 11. The cash balance at the end of 2020 is $38,400. 12. Common stock at the end of 2020 is $24,000 and retained earnings is $101,045. 13. Asset accounts are cash, accounts receivable, inventory, and furniture and fixtures. The only liability account is accounts payable. Owner's equity accounts are common stock and retained earnings. Taxes on income Total disbursements Excess of disbursements over receipts Beginning cash balance Ending cash balance Add P The Tri Town Restaurant Cash Budget for the First Quarter, 2021 96000 441600 83275 359118 64320 20400 537600 527113 10487 38400 48887