Problem 23.5A (Static) Budgeted Income Statement and Cash Budget (LO23-1, LO23-2, LO23-4, LO235) Razzo I has been in business since January of the current year. The company buys frozen pizza cruats and resels them to large supermaket chairs in five states. The following information pertains to Rizzo's first four months of operotions Rirzo's expects to apen several new sales territories in May in anticlpation of increased volume, management forocasts May sales at $72.000. Fo meet evis demand, purchases in Moy are budgeted at $42.000. The compary maintains o gross proft margin of appraimately 40 percent. AJ er Pinols sales ere en acceunt. Due to strict credit policies, the company has no bad debt expense. The following collection performance is anticipated for the remainder of the year Rirno's normaly pars for 80 percent of is purchases in the month that the purchsses are made. The remaining anount is psid in the depreciation expense Variable selling and adiministrative expences are budgeted at 5 percent of sales. The company pas all of its: selling and administrative expenses in the month that they are incurred Aizo's det sevice is $5,000 per month of this amount appraximately $4,500 represents interest expense, and $500 is poyment on the princleal. The company's tax rate is approaimately 35 percent. Quarterty tar payments ace made at the end of March, June. sersember and December Aequired: a. Prepere Mario's budgeted income statement for Moy 6. Pepare Rimo's arch budget for May. Assume that the companys casn balance on May 1 is 525.000 . c. Why Pimo's bidgeted cask flow in May diflers from us budgeted net income? Complete this suevtion by entering your anowers in the tabs below. Mrpare Rirab's budvetee incame vatement for May. Rizzo's has been in business since January of the current yeat. The company buys frozen pizza crusts and resells them to large supermarket chains in five states. The following information pertains to Rizzo's first four months of operations: 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, purchoses in Moy are budgeted at $42,000. The company maintains a gross profit margin of approximately 40 percent. Al of Rizzo's sales are on account. Due to strict credit policies, the company has no bad debt expense. The following collection perlormance is anticipated for the remainder of the year: 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 foxed selling and administrative expenses average $12,000 per month, Or this amount, $4,000 is depreciation expense. Varlable 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, opproximately $4,500 represents interest expense, and $500 is payment or the principal The company's tax rate is approximately 35 percent. Quarterly tax payments are made at the end of March, June, Septembec, and December. Required: 2. Prepare Rimo's budgeted income statement for May. b. Prepare Rizzo's cash budget for May. Assume that the company's cash balance on Moy 1 is $25,000 c Why Rimo's budgeted cash flow in May differs from its budgeted net income? Complete this question by entering your answers in the tabs below. Why Rirzo's busgeted cash flow in May differs from its budgeted net income? Problem 23.5A (Static) Budgeted Income Statement and Cash Budget (LO23-1, LO23-2, LO23-4, LO235) Rizro's has been in business shce January of the current year. The company buys frozen plizz crusts and resells them to lerge supermarket chains in five states. The following information pertains to Rizzo's first four months of operations: Rizzo s expects to open several new sales territories in May. In anticipotion of increased volume, manogement forecasts Moy soles at $72,000. To meet this demand, purchases in Moy are budgeted at \$42,000. The company maintains a gross profit margin of aporovimately 40 percent. All of Rimo); soles are on account. Due to stilict credit policies, the company has no bad debt expense. The following collection performance is anticipated for the remainder of the year: Rizzo's normaly peys for 80 percent of its purchases in the month that the purchases are made. The remaining amount is paid in the following month. The compay's fucd selling and administrative expenses average $12,000 per month. Of this amount, $4,000 is depreciation expense. Variable seling and administrative expenses are budgeted at 5 percent of sales. The company pays all of its telling and administrative expenses in the month that they are incurred. Rimots debt service is $5,000 per month. Of this amount, approximately $4,500 represents interest expense, and $500 is peyment on the principal. The company's tax rate is approximately 35 percent Quarterly tax payments are made at the end of March, June, Seplember, and December Required: 2. Prepare Rizzo's budgeted income statement for Moy. b. Prepare Rizzo's cash budget for May. Assume that the companys cash balance on May 1 is $25,000. c. Why himo's budgeted cash flow in May differs from its budgeted net income? Complete this question by entering your answers in the tabs below. Propare Rizo's cash budget for May, Aswume that the cempany's cath balance on May 1 is $25,000