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Preparing a Cash Budget La Famiglia Pizzeria provided the following information for the month of October: Sales are budgeted to be $153,000. About 85% of
Preparing a Cash Budget
La Famiglia Pizzeria provided the following information for the month of October:
- Sales are budgeted to be $153,000. About 85% of sales is cash; the remainder is on account.
- 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.
- Food and supplies purchases, all on account, are expected to be $98,000. La Famiglia pays 25% in the month of purchase and 75% in the month following purchase.
- 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.
- Utilities average $5,950 per month. Rent on the building is $4,100 per month.
- Insurance is paid quarterly; the next payment of $1,300 is due in October.
- September sales were $181,500 and purchases of food and supplies in September equaled $130,000.
- 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. $
2. Calculate the cash needed in October to pay for food purchases. $
3. Prepare a cash budget for the month of October.
La Famiglia Pizzeria | |
Cash budget | |
For the month of October | |
Beginning balance | $ |
Cash receipts | |
Cash available | $ |
Less: | |
Payments for food and supplies purchases | $ |
Owners' draw | |
Workers' wages | |
Utilities | |
Rent | |
Insurance | |
Total disbursements | $ |
Ending balance | $ |
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