Preparing a Cash Budget
La Famiglia Pizzeria provided the following information for themonth of October:
- Sales are budgeted to be $152,000. About 85% of sales is cash;the remainder is on account.
- La Famiglia expects that, on average, 70% of credit sales willbe paid in the month of sale, and 28% will be paid in the followingmonth.
- Food and supplies purchases, all on account, are expected to be$117,000. La Famiglia pays 25% in the month of purchase and 75% inthe 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 perperson.) Various part-time workers cost $7,300 per month. They arepaid for their work weekly, so on average 90% of their wages arepaid in the month incurred and the remaining 10% in the nextmonth.
- 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 duein October.
- September sales were $181,500 and purchases of food andsupplies in September equaled $130,000.
- The cash balance on October 1 is $2,147.
Required:
If required, round your answers to the nearest dollar.
1. Calculate the cash receipts expected inOctober.
$
2. Calculate the cash needed in October to payfor food purchases.
$
3. Prepare a cash budget for the month ofOctober.
| La Famiglia Pizzeria |
| Cash budget |
| For the month of October |
| Beginning balance | $ |
| Cash receipts | |
| Cash available | $ |
| Less: | |
| Payments for food and supplies purchases | $ |
| Owners' draw | |
| Workers' wages | |
| Utilities | |
| Rent | |
| Insurance | |
| Total disbursements | $ |
| Ending balance | $ |
