On average, 60% of Caf Vert's sales are for immediate cash settlement, with the remaining 40%...

 

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On average, 60% of Caf Vert's sales are for immediate cash settlement, with the remaining 40% being for credit. Of these credit sales, 50% are normally received in the month of sale, 25% in the following month and 20% in the month following that. Simone estimates that typically 5% of the credit sales will never be received and will have to be treated as 'bad' debts; (ii) Generally, the restaurant pays for 80% of its inventory purchases in the month of purchase, with the other 20% being paid in the month following purchase; (iii) Payroll expenses are always paid in the month they are incurred, as are owner's drawings; (iv) Other expenses, meanwhile, are paid 30% in the month they are incurred, and 70% in the following month; (v) Simone estimates that the balance in the business bank account will be 5,000 at 1 April 2021. Prepare a cash budget for Caf Vert for the three months beginning 1 April 2021 and advise Simone as to her options with regard to purchasing the new furniture and kitchen equipment. On average, 60% of Caf Vert's sales are for immediate cash settlement, with the remaining 40% being for credit. Of these credit sales, 50% are normally received in the month of sale, 25% in the following month and 20% in the month following that. Simone estimates that typically 5% of the credit sales will never be received and will have to be treated as 'bad' debts; (ii) Generally, the restaurant pays for 80% of its inventory purchases in the month of purchase, with the other 20% being paid in the month following purchase; (iii) Payroll expenses are always paid in the month they are incurred, as are owner's drawings; (iv) Other expenses, meanwhile, are paid 30% in the month they are incurred, and 70% in the following month; (v) Simone estimates that the balance in the business bank account will be 5,000 at 1 April 2021. Prepare a cash budget for Caf Vert for the three months beginning 1 April 2021 and advise Simone as to her options with regard to purchasing the new furniture and kitchen equipment.

Answer rating: 100% (QA)

Here is the cash budget for Caf Vert for April May and June 2021 Caf Vert Cash Budget April 2021 Jun... View the full answer