jor southwestern city seet 16 has been in owners to think more cash flow, and financial out the business Ils 60.000 donuts. The add toppings and bake 2. Sweet 16 typically have thirty days Sweet 16 Donut Shop Sweet 16 Donut Shop is located in a busy downtown commercial district of a maior Sweet 16 is widely known for their sixteen varieties of fresh-baked donuts. Although S business for many years, recent new competition from larger chains has prompted the owner seriously about budgeting. They have hired you to prepare their 20X2 operating cash flow statement budgets. To help you do so, they have provided the following information about the Sweet 16 sells 45,000 donuts per fiscal quarter, except for 04 when it sells 60.000 donuts arrive each morning from a local baking distributor, Sweet 10's employees add toppines the donuts. No donuts are held overnight (after all, who wants a day-old donut?). Sweet 16 collects cash for each sale. However, some local corporations order donuts in bulk and have thin to pay. Management estimates that 90 percent of sales are collected in the fiscal quarter of sale an remaining 10 percent is collected in the following fiscal quarter. The company pays its employees a total of $2.000 per quarter, plus 5 cents per donut sold. The de sell for 50 cents each and the ingredients cost 20 cents each. In addition, Sweet lo incurs $1.000 off operating costs each month (that is, rent, insurance, and advertising) of which $300 is depreciation non-cash expense). Sweet 16 pays its variable costs in the month incurred. It pays 80 percent of its fixed costs in the quarter incurred and the remaining amounts in the following quarter, except for wages which are paid 100 percent in the quarter incurred. In addition, supplies inventory (napkins, boxes, and the like) cost 12 percent of quarterly sales. Sweet 16 would like to hold $2,000 of supplies at the end of each quarter of 20X2. Supplies inventory at year end 20X1 totaled $1,600. Supplies inventory is paid for in the quarter the supplies are received. The balance sheet from the end of the prior year is presented below. Sweet 16 Donut Shop Balance Sheet December 31, 20x15 Assets Cash Accounts Receivable Supplies Inventory Equipment (net of $10,000 depreciation) Total Assets Liabilities and Owners' Equity Accounts Payable Common Stock Retained Earnings Total Liabilities and Owners' Equity $100,000 1,000 1,600 47,000 $149,600 $ 1,100 80,000 68,500 $149,600 Required Based on these data, prepare operating, cash flow, and financial statement budgets for Sweet ment budgets for Sweet 16 Donut Shop for 20X2. Compose a short paragraph to the owner, Art Vanderlei, about the any insights that you can draw from the results
