Oliver's Bistro provided the following information for the month of October: a)Sales are budgeted to be $395,000. About 80% of sales is cash; the remainder is on account. b)Oliver's Bistro expects that, on average, 70% of credit sales will be paid in the month of sale, and 28% will be paid in the following month. c)Food and supplies purchases, all on account, are expected to be $285,000. Oliver pays 35% in the month of purchase and 65% in the month following purchase. d)Most of the work is done by Oliver and his wife, who typically withdraw $18,500 a month from the business as their salary. (Note: The $18,500 is a payment in total to the two owners, e)Utilities and insurance average $8,750 per month. Rent on the building is $14,000 per month. f)In September, a freezer had to be replaced for $39,000. That amount is due in total in October. g)September sales were $390,000, and purchases of food and supplies in September equaled $275,000. h)The cash balance on October 1 is $1,916. 1.Calculate the cash receipts expected in October. 2.Calculate the cash needed in October to pay for food and supplies purchases. 3.Prepare a cash budget for the month of October. Cash Receipts in October Cash Sales Credit Sales October Credit Sales September Total Cash Expected Payments for Food & Supplies October September Total Cash Needed Cash Budget Beginning Cash Balance + Cash Receipts = Cash Available Less (-) Food & Supplies (-) Owner's Salary (-) Workers' Wages September (-) Workers' Wages October (-) Utilities (-) Rent (-) Freezer = Total Disbursement Ending Balance

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter4: Financial Planning And Forecasting

Section: Chapter Questions

Problem 4P

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What is the cash receipts expected in October?

What is the cash needed in October to pay for food and supplies purchases?

What is the Ending Balance of October's cash budget?

Oliver’s Bistro provided the following information for the month of October:
a)Sales are budgeted to be $395,000. About 80% of sales is cash; the remainder is on account.
b)Oliver's Bistro expects that, on average, 70% of credit sales will be paid in the month of sale, and 28% will be paid in the following month.
c)Food and supplies purchases, all on account, are expected to be $285,000. Oliver pays 35% in the month of purchase and 65% in the month following purchase.
d)Most of the work is done by Oliver and his wife, who typically withdraw $18,500 a month from the business as their salary. (Note: The $18,500 is a payment in total to the two owners,
e)Utilities and insurance average $8,750 per month. Rent on the building is $14,000 per month.
f)In September, a freezer had to be replaced for $39,000. That amount is due in total in October.
g)September sales were $390,000, and purchases of food and supplies in September equaled $275,000.
h)The cash balance on October 1 is $1,916.
1.Calculate the cash receipts expected in October.
2.Calculate the cash needed in October to pay for food and supplies purchases.
3.Prepare a cash budget for the month of October.
Cash Receipts in October
Cash Sales
Credit Sales October
Credit Sales September
Total Cash Expected
Payments for Food & Supplies
October
September
Total Cash Needed
Cash Budget
Beginning Cash Balance
+ Cash Receipts
= Cash Available
Less
(-) Food & Supplies
(-) Owner's Salary
(-) Workers' Wages September
(-) Workers' Wages October
(-) Utilities
(-) Rent
(-) Freezer
= Total Disbursement
Ending Balance

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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