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Preparing a Cash Budget La Famiglia Pizzeria provided the following information for the month of October:...

  1. Preparing a Cash Budget

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

    1. Sales are budgeted to be $167,000. About 85% of sales is cash; the remainder is on account.
    2. 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.
    3. Food and supplies purchases, all on account, are expected to be $102,000. La Famiglia pays 25% in the month of purchase and 75% in the month following purchase.
    4. 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.
    5. Utilities average $5,950 per month. Rent on the building is $4,100 per month.
    6. Insurance is paid quarterly; the next payment of $1,300 is due in October.
    7. September sales were $181,500 and purchases of food and supplies in September equaled $130,000.
    8. 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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