explain a Cash Budget

1. Oliver's Bistro provided the following information for the month of October:
2. Sales are budgeted to be $395,000. About 80% of sales is cash; the remainder is on account.
3. Oliver's Bistro expects that, on average, 70% of credit sales will be paid in the month of sale, and 28% will be paid in the following month.
4. Food and supplies purchases, all on account, are expected to be $285,000. Oliver pays 35% in the month of purchase and 65% in the month following purchase.
5. Most of the work is done by Oliver and his wife, who typically withdraw $18,500 a month from the business as their salary. (Note: The $18,500 is a payment in total to the two owners, not per person.) Various part-time workers cost $29,300 per month. They are paid for their work weekly, so on average 90% of their wages is paid in the month incurred and the remaining 10% in the next month.
6. Utilities and insurance average $8,750 per month. Rent on the building is $14,000 per month.
7. In September, a freezer had to be replaced for $39,000. That amount is due in total in October.
8. September sales were $390,000, and purchases of food and supplies in September equaled $275,000.
9. The cash balance on October 1 is $1,916.

Required:

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 the month of October.

Oliver's BistroCash BudgetFor the Month of October

Beginning balance$

Cash receipts

Cash available$

Less:Payments for food and supplies purchases$

Owners' draw

Workers' wages

Utilities and insurance

Rent

Freezer unit

Total disbursements$

Ending balance$

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