No idea on how to calculate this, please help.
Rizzo's has been in business since January of the current year. The company buys frozen pizza crusts and resells them to large supermarket chains in ve states. The following information pertains to Rizzo's first four months of operations. Purchases Sales January $46J66B $62J66B February 32,666 49,660 March an, 999 65, 999 April 24, 999 42, 999 Rizzo's expects to open several new sales territories in May. In anticipation of increased volume, management forecasts May sales at $72,000. To meet this demand, purchases in May are budgeted at $42,000. The company maintains a gross profit margin of approximately 40 percent. All of Rizzo's sales are on account. Due to strict credit policies, the company has no bad debt expense. The following collection performance is anticipated for the remainder of the year. Percent collected in month of sale 36% Percent collected in month following sale 66 Percent collected in the second month following sale 16 Rizzo's normally pays for 80 percent of its purchases in the month that the purchases are made. The remaining amount is paid in the following month. The company's fixed selling and administrative expenses average $12,000 per month. Ofthis amount, $4,000 is depreciation expense. Variable selling and administrative expenses are budgeted at 5 percent of sales. The company pays all of its selling and administrative expenses in the month that they are incurred. Rizzo's debt service is $5,000 per month. Of this amount, approximately $4,500 represents interest expense, and $500 is payment on the principal. The company's tax rate is approximately 35 percent. Quarterly tax payments are made at the end of March, June, September, and December. Required: a. Prepare Rizzo's budgeted income statement for May. b. Prepare Rizzo's cash budget for May. Assume that the company's cash balance on May1 is $25,000. Complete this question by entering your answers in the tabs below. Required B | Required A Prepare Rizzo's budgeted income statement for May. Required: a. Prepare Rizzo's budgeted income statement for May. b. Prepare Rizzo's cash budget for May. Assume that the company's cash balance on May 1 is $25,000. Complete this question by entering your answers in the tabs below. Required A Required B Prepare Rizzo's cash budget for May. Assume that the company's cash balance on May 1 is $25,000. Beginning cash, May 1 Collections on March sales Collections on April sales Collections on May sales Total cash available Payments on April payables Payments on May payables Variable selling as. administrative costs Fixed selling & administrative costs Debt service payments Ending cash, May 31
