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    Cash Budget - Rob

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    Rob runs a small family restaurant that operates on a cash basis. All sales are for cash, but materials necessary to the preparation of meals and drinks are bought on trade credit terms of 2/30 net 60.

    Sales forecast for the next six months is:

    Jan 25000
    Feb 30000
    Mar 40000
    Apr 50000
    May 30000
    Jun 25000

    Material costs are about 20% of sales.
    Labor is fixed at $10,000.00 per month and must be paid.
    Rent is $1,550.00 per month.
    Purchases in December were $6,000.00.
    Taxes must be paid in January and are $12,000.00
    Beginning cash in Jan above was $10,000.00
    Target cash balance is $10,000.00

    Prepare a cash budget assuming that Rob takes the discount for the months of Jan through June. Show all work.

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    Solution Preview

    Please see the attached file.

    Cash Budget for Six months ending 30th June
    Jan Feb Mar Apr May Jun
    Cash Balance in the beginning $10,000 $10,000 $20,120 $43,190 $74,300 $83,450
    Cash collection from $25,000 $30,000 40000 50000 30000 25000
    (a)Total receipts $35,000 ...

    Solution Summary

    This solution prepares a cash budget under the assuming that there will be a discount taken.