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

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