Problem: 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.