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
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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P11.3 You have the following information about a restaurant:
Budgeted
Cash Revenue
Budgeted
Credit Revenue
August
September
October
$30,300
29,500
27,900
25,100
32,400
$16,000
14,000
13,000
12,000
15,800
November
December
Collections on credit revenue average 90% in the month following the
sales and the remaining 10% in the month following. Cost of sales (pur-
chases) averages 38% of total sales revenue. Forty percent of cost of sales
is 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 for
October; $12,700 for November; and $12,200 for December.
Other budgeted expenses according to the forecast income state-
ments follow:
October
November
December
$2,500
300
Rent expense
$2,500
$2,500
300
300
Insurance expense
Utilities expense
Other operating costs
Depreciation (equipment)
Interest expense
500
450
550
006
4,600
1,100
1,300
4,600
4,600
400
400
400
Transcribed Image Text:P11.3 You have the following information about a restaurant: Budgeted Cash Revenue Budgeted Credit Revenue August September October $30,300 29,500 27,900 25,100 32,400 $16,000 14,000 13,000 12,000 15,800 November December Collections on credit revenue average 90% in the month following the sales and the remaining 10% in the month following. Cost of sales (pur- chases) averages 38% of total sales revenue. Forty percent of cost of sales is 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 for October; $12,700 for November; and $12,200 for December. Other budgeted expenses according to the forecast income state- ments follow: October November December $2,500 300 Rent expense $2,500 $2,500 300 300 Insurance expense Utilities expense Other operating costs Depreciation (equipment) Interest expense 500 450 550 006 4,600 1,100 1,300 4,600 4,600 400 400 400
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.
Transcribed Image Text: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.
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