Problem 12 (Similar to Discussion Board Exercise Extra Problem # 1) You own a new restaurant that is due to open on June 1. The restaurant expects to take in $500 a day in sales revenue and is open seven days a week. Sales revenue is estimated to be 80% cash and 20% credit. The payments on credit sales are not expected to be received until the end of the month following the sale. Labor and food cost combined will be 70% of sales revenue. Both these expenses will be on a cash basis. Other operating costs are estimated to be 10% of sales revenue. These costs will not have to be paid until the month following the incurrence of the cost. Depreciation is $1,000 a month Rent is $300 a month payable in advance on the first of each month Principal payments on 3 loans you made to get into business are $3.000 a month. The first payment is due on June 15. You have only $500 cash on hand on June 1. You will not be able to borrow any more money. And you have no income of your own other than the money generated by your new restaurant venture Produce the budgeted income statement for the restaurant for the month of June. Prepare the restaurant's cash budget for the month of June. Comment about the results shown by these two statements with particular reference to any possible financial difficulties you might have. Problem12: Solution Prepare a budgeted income statement and a cash budget, and comment on the results a. Budgeted Income Statement Revenue Cost of sales and labor Other costs Rent Depreciation Operating costs Net income S I $ b. Cash Budget Opening Balance Cash Revenue Total cash receipts Cash expenses Cost of sales and labor Rent Loan payment Total cash disbursements Ending cash balance $