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.