Cornerstone Exercise $9-14$ Preparing a Cash Budget

a Famiglia Pizzeria provided the following information for the month of October:

a$.$ Sales are budgeted to be $$157,000.$ About $85$ percent of sales are cash; the remainder are on account.

b$.$ La Famiglia expects that, on average, $70$ percent of credit sales will be paid in the month of sale, and $28$ percent will be paid in the following month. Assume $2$ percent lost to bad debts.

c$.$ Food and supplies purchases, all on account, are expected to be $$116,000.$ La Famiglia pays $25$ percent in the month of purchase and $75$ percent in the month following purchase.

d$.$ 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 per person.$)$ Various part$-$time workers cost $$7,300$ per month. They are paid for their work weekly, so$-$on average $90$ percent of their wages are paid in the month incurred and the remaining $10$ percent in the next month.

e$.$ Utilities average $$5,590$ per month. Rent on the building is $$4,100$ per month.

f$.$ Insurance is paid quarterly; the next payment of $$1,200$ is due in October.

g$.$ September sales were $$181,500$ and purchases of food in September equalled $$130,000.$

h$.$ The cash balance on October $1$ is $$2,147.$

Required:

Calculate the Eash receipts expected in October. $($Hint: Remember to include both cash sales and payments from credit sales.$)$

Calculate the cash needed in October to pay for food purchases.

Prepare a cash budget for October.