La Famiglia Pizzeria provided the following information for the month of October: Sales are budgeted to be $157,000. About 85% of sales is cash; the remainder is on account. 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. Food and supplies purchases, all on account, are expected to be $116,000. La Famiglia pays 25% in the month of purchase and 75% in the month following purchase. 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. Utilities average $5,950 per month. Rent on the building is $4,100 per month. Insurance is paid quarterly; the next payment of $1,200 is due in October. September sales were $181,500 and purchases of food and supplies in September equaled $130,000. The cash balance on October 1 is $2,147. Required: 1. Calculate the cash receipts expected in October. $fill in the blank 9d649501bffe002_1 2. Calculate the cash needed in October to pay for food purchases. $fill in the blank 9d649501bffe002_2 3. Prepare a cash budget for the month of October.
La Famiglia Pizzeria provided the following information for the month of October: Sales are budgeted to be $157,000. About 85% of sales is cash; the remainder is on account. 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. Food and supplies purchases, all on account, are expected to be $116,000. La Famiglia pays 25% in the month of purchase and 75% in the month following purchase. 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. Utilities average $5,950 per month. Rent on the building is $4,100 per month. Insurance is paid quarterly; the next payment of $1,200 is due in October. September sales were $181,500 and purchases of food and supplies in September equaled $130,000. The cash balance on October 1 is $2,147. Required: 1. Calculate the cash receipts expected in October. $fill in the blank 9d649501bffe002_1 2. Calculate the cash needed in October to pay for food purchases. $fill in the blank 9d649501bffe002_2 3. Prepare a cash budget for the month of October.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
La Famiglia Pizzeria provided the following information for the month of October:
- Sales are budgeted to be $157,000. About 85% of sales is cash; the remainder is on account.
- 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.
- Food and supplies purchases, all on account, are expected to be $116,000. La Famiglia pays 25% in the month of purchase and 75% in the month following purchase.
- 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.
- Utilities average $5,950 per month. Rent on the building is $4,100 per month.
- Insurance is paid quarterly; the next payment of $1,200 is due in October.
- September sales were $181,500 and purchases of food and supplies in September equaled $130,000.
- The cash balance on October 1 is $2,147.
Required:
1. Calculate the cash receipts expected in October.
$fill in the blank 9d649501bffe002_1
2. Calculate the cash needed in October to pay for food purchases.
$fill in the blank 9d649501bffe002_2
3. Prepare a
| La Famiglia Pizzeria | |
| Cash Budget | |
| For the Month of October | |
| Beginning balance | $fill in the blank ad36fafb1f99fe6_1 |
| Cash receipts | fill in the blank ad36fafb1f99fe6_2 |
| Cash available | $fill in the blank ad36fafb1f99fe6_3 |
| Less: | |
| Payments for food and supplies purchases | $fill in the blank ad36fafb1f99fe6_4 |
| Owners' draw | fill in the blank ad36fafb1f99fe6_5 |
| Workers' wages | fill in the blank ad36fafb1f99fe6_6 |
| Utilities | fill in the blank ad36fafb1f99fe6_7 |
| Rent | fill in the blank ad36fafb1f99fe6_8 |
| Insurance | fill in the blank ad36fafb1f99fe6_9 |
| Total disbursements | $fill in the blank ad36fafb1f99fe6_10 |
| Ending balance | $fill in the blank ad36fafb1f99fe6_11 |
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