P11.3 You have the following information about a restaurant:BudgetedCash RevenueBudgetedCredit RevenueAugustSeptemberOctober$30,30029,50027,90025,10032,400$16,00014,00013,00012,00015,800NovemberDecemberCollections on credit revenue average 90% in the month following thesales and the remaining 10% in the month following. Cost of sales (pur-chases) averages 38% of total sales revenue. Forty percent of cost of salesis on a cash basis, and 60% is paid in the month following purchase. Pay-roll costs (which are paid on a cash basis) are forecast to be $13,100 forOctober; $12,700 for November; and $12,200 for December.Other budgeted expenses according to the forecast income state-ments follow:OctoberNovemberDecember$2,500300Rent expense$2,500$2,500300300Insurance expenseUtilities expenseOther operating costsDepreciation (equipment)Interest expense5004505500064,6001,1001,3004,6004,600400400400 Note that the rent, utilities, other operating costs, and interest are paid in cash eachmonth as the expense is incurred. The insurance expense is paid in January each yearin advance for the whole year ($3,600). The restaurant financed its equipment andmakes monthly payments on the balance owing (principal amount) of $1,000. InDecember, the restaurant plans to sell off some old equipment and estimates it willreceive $1,500 from the sale. At the same time, it must spend $5,400 on newequipment. If there is sufficient cash on hand, the owner plans to pay a bonus to thestaff. This bonus will amount to $3,600 and will be paid in December. Prepare therestaurant's cash budget for each of the three months: October, November, andDecember. The beginning cash balance October 1 is $2,410.

Cash Budget is an estimation of Cash receipts and payments of a specific period.

Note that the rent, utilities, other operating costs, and interest are paid in cash each month as the expense is incurred. The insurance expense is paid in January each year in advance for the whole year ($3,600). The restaurant financed its equipment and makes monthly payments on the balance owing (principal amount) of $1,000. In December, the restaurant plans to sell off some old equipment and estimates it will receive $1,500 from the sale. At the same time, it must spend $5,400 on new equipment. If there is sufficient cash on hand, the owner plans to pay a bonus to the staff. This bonus will amount to $3,600 and will be paid in December. Prepare the restaurant's cash budget for each of the three months: October, November, and December. The beginning cash balance October 1 is $2,410.

Note that the rent, utilities, other operating costs, and interest are paid in cash each month as the expense is incurred. The insurance expense is paid in January each year in advance for the whole year ($3,600). The restaurant financed its equipment and makes monthly payments on the balance owing (principal amount) of $1,000. In December, the restaurant plans to sell off some old equipment and estimates it will receive $1,500 from the sale. At the same time, it must spend $5,400 on new equipment. If there is sufficient cash on hand, the owner plans to pay a bonus to the staff. This bonus will amount to $3,600 and will be paid in December. Prepare the restaurant's cash budget for each of the three months: October, November, and December. The beginning cash balance October 1 is $2,410.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

In October, a store offers the public a "Buy Now Pay Later" sales plan. With this plan, Mrs. Hernández acquires a hair straightener, which she receives on November 1, and which she must pay in 12 monthly installments of $ 55.5 as of January 1 of the following year. If you consider an interest of 55% annually convertible monthly. What is the cash value of the furniture?
Mr. Harrington had a new heating system installed in his office. The balance owing to the heating company is $40,000 which includes equipment and installation fees. The heating company has agreed to let him make individual payments on the account whenever he’d like, but the final balance must be paid two years (24 months) from now. Starting today, interest will accumulate on the balance at 3.45% compounded monthly. Mr. Harrington will make a payment of $8000 4 months from now and $6000 19 months from now. What is the final balance owing on the account in two years (24 months from now)?
Lucky Strike, a bowling alley, purchased new equipment from Brunswick in the amount of $850,000. Brunswick is allowing Luck Strike me to amortize the cost of the equipment with monthly payments over 2 years at 12% interest. What equal monthly payment will be required to amortize this loan?
Langara Woodcraft borrowed money to purchase equipment. The loan is repaid by making payments of $902.51 at the end of every six months over five years. If interest is 6.4% compounded monthly, what was the original loan balance?
Mr. Harrington had a new heating system installed in his office. The balance owing to the heating company is $24,000 which includes equipment and installation fees. The heating company has agreed to let him make individual payments on the account whenever he’d like, but the final balance must be paid two years (24 months) from now. Starting today, interest will accumulate on the balance at 3.80% compounded monthly. Mr. Harrington will make a payment of $7000 4 months from now and $8000 18 months from now. What is the value of i (the periodic interest rate)? a. 0.001583 b. 1.900000 c. 0.009500 d. 0.003167
In early December Alice and Bob decided to open Sample Cafe with $16,000 of their ownmoney and $20,000 borrowed from a friend. They have spent $13,000 on equipment andfurniture, and they have purchased $3,200 worth of cups for cash which they expect will beused over the next three months. Having put down a $2,300 deposit for a location on MainSt., they will pay the first month’s rent when they open their doors on January 1.In the balance sheet template below, fill in the appropriate values as of December 31.
A credit card company offers an annual 2% cash back rebate on all gasoline purchases. If a family spent 6200$ on gas purchases over the course of a year, what was the family's rebate at the end of the year?
The accountant for Eastern Appliances manages the “no money down” arrangements offered to its customers. A customer purchased a refrigerator normally priced at $1,284.53 with all taxes included. Using a required rate of return of 9% compounded quarterly, the accountant determined that, after a deferral period, the customer should make 12 monthly payments of $119.16, with the first payment due on November 1, 2020. On what date was the refrigerator purchased?