EvanEvan'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:

a.

Sales are

6060%

cash and

4040%

credit. Credit sales are collected

2020%

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

$ 54 comma 000$54,000.

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

	Budgeted Sales Revenue
January. . . . . . . . . . . . . . .		$58,000
February. . . . . . . . . . . . . .		$71,000

b.

Actual purchases of direct materials in December were

$ 25 comma 000$25,000.

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

$ 21 comma 000$21,000

and

$ 27 comma 500$27,500

in February. All purchases are paid

5050%

in the month of purchase and

5050%

the following month.

c.

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

$ 8 comma 000$8,000

in December. Budgeted salaries in January are

$ 9 comma 000$9,000

and February budgeted salaries are

$ 10 comma 500$10,500.

Sales commissions each month are

1212%

of that month's sales.

d.

Rent expense is

$ 3 comma 200$3,200

per month.

e.

Depreciation is

$ 2 comma 800$2,800

per month.

f.

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

$ 11 comma 500$11,500.

g.

The cash balance at the end of the prior year was

$ 21 comma 000$21,000.

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?

Requirement 1a. Prepare a schedule of budgeted cash collections for January and February. Show totals for each month and totals for January and February combined.

Evan's Restaurant Supply

Cash Collections Budget

For the Months Ended January 31 and February 28

	January
Cash sales
Collection on credit sales
Total cash collections

February

Total

b. Prepare a schedule of budgeted cash payments for purchases for January and February. Show totals for each month and totals for January and February combined.

Evan's Restaurant Supply

Cash Payments for Material Purchases Budget

For the Months Ended January 31 and February 28

	January
50% of current month DM purchases
50% of last month's DM purchases
Total cash payments

February

Total

c. Prepare a schedule of budgeted cash payments for operating expenses for January and February. Show totals for each month and totals for January and February combined. (If a box is not used in the table leave the box empty; do not enter a zero. Round all amounts to the nearest dollar.)

Evan Restaurant Supply

Cash Payments for Operating Expenses Budget

For the Months Ended January 31 and February 28

	January
Variable cash operating expenses:
Sales commissions: December
Sales commissions: January
Sales commissions: February
Total variable cash operating expenses
Fixed cash operating expenses:
Sales salaries: December
Sales salaries: January
Sales salaries: February
Rent expense
Tax expense
Total fixed cash operating expenses
Total cash payments for operating expenses

February

Total

Requirement 2. Prepare a combined cash budget for January and February. If no financing activity takes place, what is the budgeted cash balance on February 28?

Evan's Restaurant Supply

Combined Cash Budget

For the Months Ended January 31 and February 28

	January	February	2 months
Beginning cash balance
Plus: Cash collections from customers
Total cash available
Less cash payments:
Direct materials purchases
Operating expenses
Total cash payments
Ending cash balance