Pratt's Pizza Inc. is a small chain of take-out pizza restaurants. The average selling price of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Pratt's Pizza Inc. is a small chain of take-out pizza restaurants. The average selling price of a Pratt's pizza is $15. Pratt's estimated sales for the first five months of the 2020 fiscal year are as follows. Month January February March April May required a) Prepare the sales budget for the first quarter, number of Pizzas 15,000 18,000 21,000 27,000 25,000 b) The average cost of a pizza is $6. Opening food inventory for the year is estimated to be $9,000. When compiling the annual budget, the operations manager insists that 10% of next month's requirements should be on hand to begin each month. Prepare the purchases budget for the first quarter. c) Pratt's sales history indicates that 10% of sales will be for cash and 90% of sales will be on credit card. Using the information from the sales budget, determine the forecasted cash and credit sales. Pratt's has reviewed past collection history and has determined that credit card sales will be collected as follows: 90% is collected in the month of sale and 10% is collected the following month. The total credit card sales for the month of December 31, 2019, were $250,000. Prepare the cash collection per month section of the cash receipts budget worksheet for the first quarter. d) Pratt's will pay for 70% of its purchases of food inventory in the month of purchase and the remaining 30% in the following month. The total inventory purchases for the month of December 31, 2019, were $95,000. Prepare the budgeted schedule of cash payments for the first quarter. e) Prepare a cash budget for the first quarter. Assume the following: 1. Pratt's started the year with $20,000 in its bank account and must maintain a minimum cash balance of $10,000 at the end of each month.. 2. Pratt's has access to an open line of credit with the bank to borrow money if needed. To keep things simple, ignore interest calculations on the bank borrowings. Also, loan borrowings are taken in multiples of $1,000. 3. Pratt's maintains that it will repay debts as soon as possible with any excess cash that becomes available. 4. Pratt's has budgeted the following for 2020: Payment for operating expenses = $80,000 each month. Depreciation expense is $5,400 a month. Pratt's will need to purchase new ovens. The total cost of the ovens is $180,000. Pratt's will pay $100,000 in January and $80,000 in February. Cash dividends of $10,000 will be paid to shareholders in February and March. . Pratt's Pizza Inc. is a small chain of take-out pizza restaurants. The average selling price of a Pratt's pizza is $15. Pratt's estimated sales for the first five months of the 2020 fiscal year are as follows. Month January February March April May required a) Prepare the sales budget for the first quarter, number of Pizzas 15,000 18,000 21,000 27,000 25,000 b) The average cost of a pizza is $6. Opening food inventory for the year is estimated to be $9,000. When compiling the annual budget, the operations manager insists that 10% of next month's requirements should be on hand to begin each month. Prepare the purchases budget for the first quarter. c) Pratt's sales history indicates that 10% of sales will be for cash and 90% of sales will be on credit card. Using the information from the sales budget, determine the forecasted cash and credit sales. Pratt's has reviewed past collection history and has determined that credit card sales will be collected as follows: 90% is collected in the month of sale and 10% is collected the following month. The total credit card sales for the month of December 31, 2019, were $250,000. Prepare the cash collection per month section of the cash receipts budget worksheet for the first quarter. d) Pratt's will pay for 70% of its purchases of food inventory in the month of purchase and the remaining 30% in the following month. The total inventory purchases for the month of December 31, 2019, were $95,000. Prepare the budgeted schedule of cash payments for the first quarter. e) Prepare a cash budget for the first quarter. Assume the following: 1. Pratt's started the year with $20,000 in its bank account and must maintain a minimum cash balance of $10,000 at the end of each month.. 2. Pratt's has access to an open line of credit with the bank to borrow money if needed. To keep things simple, ignore interest calculations on the bank borrowings. Also, loan borrowings are taken in multiples of $1,000. 3. Pratt's maintains that it will repay debts as soon as possible with any excess cash that becomes available. 4. Pratt's has budgeted the following for 2020: Payment for operating expenses = $80,000 each month. Depreciation expense is $5,400 a month. Pratt's will need to purchase new ovens. The total cost of the ovens is $180,000. Pratt's will pay $100,000 in January and $80,000 in February. Cash dividends of $10,000 will be paid to shareholders in February and March. .
Expert Answer:
Related Book For
College Accounting Chapters 1-30
ISBN: 978-1259631115
15th edition
Authors: John Price, M. David Haddock, Michael Farina
Posted Date:
Students also viewed these accounting questions
-
1. Simplify and evaluate for x = -3, y = 4, and z = 5. (K-5 marks) 2_3 xyz xyz Z
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Here are three relations, R(A,B), S(C,D), and T(E,F). Their current values are: A 0 1 R B 1 0 1 1 Compute the result of the query: C 0 1 1 a. (1, 1, 1, 1) S b. (0,1.1.1) (1.0.2.11 d (0.12.1 D 1...
-
For each polynomial function, find (a) (-1), (b) (2), and (c) (0). f(x)=x5x4
-
In a region of space where gravitational forces can be neglected, a sphere is accelerated by a uniform light beam of intensity 6.0mW/m2. The sphere is totally absorbing and has a radius of 2.0 m and...
-
The point at which solid, liquid, and gas phases co-exist is known as the (a) Freezing point (b) Triple point (c) Boiling point (d) None of these.
-
What assumptions underlie ecological accounting? Consider whether one assumption behind ecological accounting and reporting is more important than the other assumptions.
-
At the beginning of the current period, Huang Co. had a balance of $100,000 in Accounts Receivable and a $7,000 credit balance in Allowance for Doubtful Accounts. In the period, it had net credit...
-
Tempo Company's fixed budget (based on sales of 18,000 units) folllows. Fixed Budget Sales (18,000 units x $205 per unit) Costs Direct materials Direct labor Indirect materials Supervisor salary...
-
Fourth-Sixth-Twelfth Bank currently pays an annuall dividend of $1.40 per share. After extensive analysis, you forecast that the Bank's stock will continue to pay the $1.40 dividend for four years....
-
In the table below there are three years of a basket of retail goods. From this information calculate the price index of 1990 if the base year in 1980? (Round your answer to the nearest whole...
-
Jessica bought a new heavy truck for $35,000 to use 80% for her sole proprietorship. Total miles driven include 8,000 in 2019, 9,000 in 2020, and 8,500 in 2021. If Jessica uses the standard mileage...
-
in January 2018 photo studios acquires new camera. The price of the cameras is 1750 how can i calculate the impairment loss of the camera at the end of 2020, taking into account that the recoverable...
-
Using the EOQ Model, Tokyo Company computed the economic order quantity for one of the materials it uses in its production to be 4,000 units. The Company maintains safety stock of 300 units. The...
-
Future Value of an Annuity What is the future value of a $1,300 annuity payment over 6 years if the interest rates are 9 percent?
-
Assume an investor is looking for financing for a project that costs $300,000. A lender offers financing available in the amount of $210,000 at an annual mortgage constant of 10.00%. The loan is...
-
Kelly is a nurse working at the Canberra Hospital in the maternity ward. She is also a single mother with a 4-year child named Lisa. Kelly places Lisa into childcare whilst she is working at a cost...
-
One Way Cellular accountants have assembled the following data for the year ended September 30, 2014: Prepare the operating activities section using the indirect method for One Way Cellulars...
-
What are the requirements that must be met in order for a document to be negotiable?
-
What is meant by the concept of neutrality in accounting?
-
Using the data given above, what amount of premium will be amortized by Cort Inc. on October 1, 2019, using straight-line amortization? Give the general journal entry to record this amortization....
-
Audits can be categorized into five types: (1) financial statement audits, (2) audits of internal control, (3) compliance audits, (4) operational audits, and (5) forensic audits.
-
Cendant Corporation (Cendant). On December 17, 1997, CUC International merged with HFS Incorporated to form Cendant. Cendant operates primarily in three business segmentsalliance marketing, travel,...
-
Sandy Pitts is auditing Hofmeister Hardware Company, a fast-growing retail hardware chain in the Atlanta area. While Pitts has previously worked on this engagement, this is her first year as the...
Study smarter with the SolutionInn App