PREPARE A CASH BUDGET FOR 1st QUARTER. ALL INFO NEEDED IS THERE. THANKS IN ADVANCE!!
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Cash Budget for the First Quarter 2022
The Tri Town Restaurant is situated in a local shopping center and serves food of many different cultures. It also caters private functions for companies. The results of operations are as follows:
Sales: $480,000
Less cost of sales: $331,200
Gross margin: $148,800
Less selling, general, and administrative expenses: $57,600
Income before taxes: $91,200
Less income taxes: $18,240
Net income: $72,960
Cash receipts:
Collections of sales:
Quarter 4, 2020 collections: $96,000
Quarter 1, 2021 collections: $441,600
Total cash receipts: $537,600
Additional information:
Cash disbursements:
80 percent of sales are collected in the quarter of sale and 20 percent are collected in the quarter following sale. The balance in accounts receivable at the end of 2020 relates to sales in the fourth quarter of 2020.
Payment for inventory purchases:
Food purchases in the fourth quarter of 2020 are $333,100. The balance in accounts payable at the end of 2020 relates to purchases in the fourth quarter of 2020. Food inventory at the end of 2020 is $16,320. For 2021, the company plans to hold ending inventory equal to 30 percent of the subsequent quarter's cost of sales. Selling, general, and administrative expenses are expected to increase by $11,520 due to increases in advertising and salaries. All other expenses in this category are expected to remain constant.
Quarter 4, 2020 payments: $83,275
Quarter 1, 2021 payments: $359,118
Selling and administrative expenses: $64,320
75 percent of inventory purchases are paid in the quarter of purchase and 25 percent are paid in the following quarter. All taxes on income: $20,400
Selling and administrative expense includes $4,800 of depreciation related to fixtures and equipment with a book value (net of accumulated depreciation) of $57,600 at the end of 2020.
The tax rate is expected to remain at 20 percent and taxes are paid in the quarter incurred. The cash balance at the end of 2020 is $38,400.
Excess of disbursements over receipts: $10,487
Common stock at the end of 2020 is $24,000 and retained earnings is $101,045.
Asset accounts are Cash, accounts receivable, inventory, and furniture and fixtures. The only liability account is accounts payable. Owner's equity accounts are common stock and retained earnings.
Add:
Beginning cash balance: $38,400
Ending cash balance: $48,887
