Financial information for Strawberry’s Place is as follows: Cash at 1/1/20X1 is $10,000. The firm desires to maintain a minimum balance of $10,000 at the end of each month. Total monthly sales are as follows: December January February 20X0 20X1 20X1 $120,000 150,000 (est.) 160,000 (est.) The sales are 40 percent cash and 60 percent credit card. Visa is the only acceptable credit card at Strawberry’s, and assume the charges are converted to cash the day of the sale. The brokerage charge is 2 percent of the sale. Expected other income is $2,000 from interest to be received in February. In addition, in January, a range with a net book value of $300 is expected to be sold for cash, resulting in a $1,000 gain on the sale. Food and beverages are paid for the month following the sale and average 40 percent and 25 percent, respectively. Food sales are four times beverage sales. Total sales consist of only food and beverage sales. Labor is paid for the last day of the month and averages 35 percent of sales. Other expenses approximate $20,000 per month and are paid for in that month. In the month of January $30,000 is expected to be expended on new equipment. Funding for this expenditure in part comes from a long-term loan of $15,000 from the Delaware Bank and Trust. If the firm borrows working capital funds, it must do so on an incremental basis of $1,000. 1. Prepare the cash budgets for January and February 20X1
Financial information for Strawberry’s Place is as follows:
Cash at 1/1/20X1 is $10,000. The firm desires to maintain a minimum balance of $10,000 at the end of each month.
Total monthly sales are as follows:
| December January February |
20X0 20X1 20X1 |
$120,000 150,000 (est.) 160,000 (est.) |
The sales are 40 percent cash and 60 percent credit card. Visa is the only acceptable credit card at Strawberry’s, and assume the charges are converted to cash the day of the sale. The brokerage charge is 2 percent of the sale.
Expected other income is $2,000 from interest to be received in February. In addition, in January, a range with a net book value of $300 is expected to be sold for cash, resulting in a $1,000 gain on the sale.
Food and beverages are paid for the month following the sale and average 40 percent and 25 percent, respectively. Food sales are four times beverage sales. Total sales consist of only food and beverage sales. Labor is paid for the last day of the month and averages 35 percent of sales.
Other expenses approximate $20,000 per month and are paid for in that month. In the month of January $30,000 is expected to be expended on new equipment. Funding for this expenditure in part comes from a long-term loan of $15,000 from the Delaware Bank and Trust.
If the firm borrows
1. Prepare the
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