Question

Roland Ratzenberger is planning to purchase a restaurant from its current owner. He will have to borrow £250,000 at 9% interest to buy the business. Once he has paid for the business, he will have £40,000 in cash to start trading. From the following information draw up his cash budget for the next 6 months. Sales per month of £33,350, of which 25% will be on one month's credit. His purchases will be £13,340 per month, of which £5,250 will be on one month's credit. He will pay himself £2,000 a month. His wage bill will be £8,000 a month, and overheads will be £8,000 a month including £1,000 a month depreciation. He will have to pay the interest on his loan every 3 months. Using the figures given above produce a budgeted trading and profit and loss account for the first 6 months of Roland Ratzenberger's restaurant. Comment on what the figures show you

Answer 1

Cash Budget for the 6 Months Particulars Workings Sales 33350*6-(33350*25%) 191762.5 Less-Purchases 13340*6-5250 74790 Less-Pay himself 2000*6 12000 Less-Wages 8000*6 48000 Less-Overheads 7000*6 42000 Less-Interest 250000*9%*6/12 11250 Cash Budget for the 6 Months 3722.5 Budgeted Trading and Profit & Loss Account for the first 6 months Debit Credit Particulars $ Particulars To Purchses 80040 By Sales 200100 To Wages 48000 To Gross Profit (B/F) 72060 200100 200100 To Pay himself 12000 By Gross Profit 72060 To Overheads 48000 To Interest 11250 To Net Profit (B/F) 810 72060 72060 Note- Depreciation will not take in cash budget, it is not a cash expenses