Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Preparing a Cash Budget La Famiglia Pizzeria provided the following information for the month of October: Sales are budgeted to be $166,000. About 85% of

Preparing a Cash Budget

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

Sales are budgeted to be $166,000. 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 $109,000. 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 $1,600 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 $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Basic Accounting Concepts Principles And Procedures Volume 1

Authors: Gregory Mostyn, Worthy And James

2nd Edition

0991423100, 978-0991423101

More Books

Students also viewed these Accounting questions

Question

What do you think Katsoudas means by the phrase one size fits one?

Answered: 1 week ago

Question

How do you think GM should handle this decision and why?

Answered: 1 week ago