Cornerstone Exercise 9-14 Preparing a Cash Budget " OBJECTIVE 3 La Famiglia Pizzeria provided the following information for the month of October: a. Sales are budgeted to be $157,000. About 85 percent of sales are cash; the CORNERSTONE 9_13| remainder are on account. b. La Famiglia expects that, on average, 70 percent of credit sales will be paid in the month ofsale, and 28 percent will be paid in the following month. Assume 2 percent lost to bad debts. c. Food and supplies purchases, all on account, are expected to be $116,000. La Famiglia pays 25 percent in the month of purchase and 75 percent in the month following purchase. d. Most ofthe 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 per person.) Various part-time workers cost $7,300 per month. They are paid for their work weekly, so 011 average 90 percent oftheir wages are paid in the month incurred and the remaining 10 percent in the next month. e. Utilities average $5,590 per month. Rent on the building is $4,100 per month. f. Insurance is paid quarterly; the next payment of $1,200 is due in October. g. September sales were $181,500 and purchases of food in September equalled $130,000. 11. The cash balance on October 1 is $2,147. 1. Calculate the cash receipts expected in October. (Hint: Remember to include both cash sales and payments from credit sales.) 2. Calculate the cash needed in October to pay for food purchases. 3. Prepare a cash budget for October