Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Rizzo's has been in business since January of the current year. The company buys frozen pizza crusts and resells them to large supermarket chains in

image text in transcribed
image text in transcribed
image text in transcribed
Rizzo's has been in business since January of the current year. 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 $72000. To meet this demand, purchases in May are budgeted at $42.000. The company maintains a gross profit margin of approximately 40 percent. All of Rizzo's sales are on account. Due to strict credit policles, the company has no bad debt expense. The following collection performance is anticipated for the remainder of the year. Rizzo's normally pays for 80 percent of its purclases in the month that the purchases are made. The remaining amount is paid in the following month. The company's fixed selling and administrative expenses average $12.000 per month. Of this amount, $4,000 is depreciation expense. Variable 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, approximately $4,500 represents interest expense, and $500 is payment on the principal. The company's tax rate is approximately 35 percent. Quarterly tax payments are made at the end of March, June, September, and December. Required: o. Prepare Rizzo's budgeted income statement for May. b. Prepare Rizzo's cash budget for May. Assume that the company's cash balance on May 1 is $25,000. Complete this question by entering your answers in the tabs below. Prepare Rizo's budgeted income statement for May Required: o. Prepare Rizzo's budgeted income statement for May. b. Prepare Rizzo's cash budget for May. Assume that the company's cash balance on May 1 is $25,000. Complete this question by entering your answers in the tabs below. Prepare Rizzo's cash budget for May. Assume that the company's cash balance on May 1 is $25,000

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

More Books

Students also viewed these Accounting questions

Question

Presentations Approaches to Conveying Information

Answered: 1 week ago