Preparing a Cash Budget

La Famiglia Pizzeria provided the following information for the month of October:

a.Sales are budgeted to be $163,000. About 85% of sales is cash; the remainder is on account.

b.La Famiglia 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.

c.Food and supplies purchases, all on account, are expected to be $100,000. La Famiglia pays 25% in the month of purchase and 75% in the month following purchase.

d.Most of the 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 on average 90% of their wages are paid in the month incurred and the remaining 10% in the next month.

e.Utilities average $5,950 per month. Rent on the building is $4,100 per month.

f.Insurance is paid quarterly; the next payment of $1,000 is due in October.

g.September sales were $181,500 and purchases of food and supplies in September equaled $130,000.

h.The cash balance on October 1 is $2,147.

Required:

If required, round your answers to the nearest dollar.

1.Calculate the cash receipts expected in October.

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2.Calculate the cash needed in October to pay for food purchases.

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3.make a cash budget for the month of October.

La Famiglia Pizzeria

Cash budget

For the month of October

Beginning balance

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Cash receipts

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Cash available

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Less:

Payments for food and supplies purchases

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Owners' draw

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Workers' wages

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Utilities

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Rent

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Insurance

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Total disbursements

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Ending balance

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