4-Month Cash Budget Projection for Flames Restaurant
How can we prepare a 4-month cash budget for Flames restaurant?
What are the key components and steps involved in projecting the cash flow for January to April?
Preparing a 4-Month Cash Budget for Flames Restaurant
Creating a cash budget involves estimating both receipts and payments for each month. Let's break down the process step by step:
Step 1: Calculate Cash Sales
January cash sales: $120,000
February cash sales: $144,000
March cash sales: $172,800
April cash sales: $207,360
Step 2: Calculate Credit Sales
January credit sales: $96,000
February credit sales: $115,200
March credit sales: $138,240
April credit sales: $165,888
Step 3: Calculate Total Sales
January total sales: $216,000
February total sales: $259,200
March total sales: $311,040
April total sales: $373,248
Step 4: Calculate Purchases
January purchases: $129,600
February purchases: $155,520
March purchases: $186,624
April purchases: $223,949
Step 5: Calculate Loan Interest
Monthly loan interest: $540
Step 6: Calculate Rental
Rental expenses: $80,000 per month
Step 7: Calculate Utilities
Utilities expenses vary from $24,000 to $38,000 over the four months
Step 8: Calculate Other Expenses
Other expenses: $12,000 per month
Step 9: Calculate Cash Budget
By comparing receipts (cash and credit sales) to payments (purchases, rental, utilities, and other expenses), you can determine the net cash flow for each month.
After completing this process for January through April, you will have a clear view of the expected cash flow for Flames restaurant during the initial months of operation. This budget projection will help in managing finances effectively and making informed decisions to ensure the restaurant's success.