Brian's

Restaurant Supply is preparing its cash budgets for the first two months of the upcoming year. Here is the information about the company's upcoming cash receipts and cash disbursements:

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Requirements

1.	Prepare schedules of (a) budgeted cash collections, (b) budgeted cash payments for purchases, and (c) budgeted cash payments for operating expenses. Show totals for each month and totals for January and February combined.
2.	Prepare a combined cash budget. If no financing activity takes place, what is the budgeted cash balance on February 28?

a.

Sales are

75%

cash and

25%

credit. Credit sales are collected

10%

in the month of sale and the remainder in the month after sale. Actual sales in December were

$54,000.

Schedules of budgeted sales for the two months of the upcoming year are as follows:

	Budgeted Sales Revenue
January. . . . . . . . . . .	$61,000
February. . . . . . . . . . . .	$68,000

b.

Actual purchases of direct materials in December were

$25,500.

The company's purchases of direct materials in January are budgeted to be

$23,000

and

$26,000

in February. All purchases are paid

40%

in the month of purchase and

60%

the following month.

c.

Salaries and sales commissions are also paid half in the month earned and half the next month. Actual salaries were

$9,000

in December. Budgeted salaries in January are

$10,000

and February budgeted salaries are

$11,500.

Sales commissions each month are

10%

of that month's sales.

d.

Rent expense is

$2,700

per month.

e.

Depreciation is

$2,300

per month.

f.

Estimated income tax payments are made at the end of January. The estimated tax payment is projected to be

$13,500.

g.

The cash balance at the end of the prior year was

$25,000.