Managing Finances Within A Budget For Daniells And Waterside Cafe

The two local food businesses such as café or restaurant that has been chosen for this particular study are Daniells’ Café and Café Waterside. The average cheques are $40 and $55 respectively.

Name of the Restaurant	Daniells' Café	Café Waterside
Average Cheque	$40.00	$55.00

 

DAILY AVERAGE COVERS:
Days	Breakfast		Lunch		Dinner		TOTAL COVER
	Daniells' Café	Café Waterside	Daniells' Café	Café Waterside	Daniells' Café	Café Waterside	Daniells' Café	Café Waterside
Monday	25	18	40	32	64	75	129	125
Tuesday	27	20	42	34	66	77	135	131
Wednesday	29	22	44	36	68	79	141	137
Thursday	31	24	46	38	70	81	147	143
Friday	33	26	48	40	72	83	153	149
Saturday	20	13	52	35	82	93	154	141
Sunday	17	11	56	30	92	103	165	144
TOTAL	182	134	328	245	514	591	1024	970

 

DAILY ESTIMATED SALES:
Days	Food Sales		Non-Alcoholic Beverage Sales		Alcoholic Beverage Sales		TOTAL SALES
	Daniells' Café	Café Waterside	Daniells' Café	Café Waterside	Daniells' Café	Café Waterside	Daniells' Café	Café Waterside
Monday	$2,580	$3,438	$1,032	$1,375	$1,548	$2,063	$5,160	$6,875
Tuesday	$2,700	$3,603	$1,080	$1,441	$1,620	$2,162	$5,400	$7,205
Wednesday	$2,820	$3,768	$1,128	$1,507	$1,692	$2,261	$5,640	$7,535
Thursday	$2,940	$3,933	$1,176	$1,573	$1,764	$2,360	$5,880	$7,865
Friday	$3,060	$4,098	$1,224	$1,639	$1,836	$2,459	$6,120	$8,195
Saturday	$3,080	$3,878	$1,232	$1,551	$1,848	$2,327	$6,160	$7,755
Sunday	$3,300	$3,960	$1,320	$1,584	$1,980	$2,376	$6,600	$7,920
TOTAL	$20,480	$26,675	$8,192	$10,670	$12,288	$16,005	$40,960	$53,350

 

BUDGETED MONTHLY INCOME STATEMENT:
	Daniell's Café		Café Waterside
Particulars	Amount	Amount	Amount	Amount
Revenue:
Food	$81,920		$106,700
Non-Alcoholic Beverage	$32,768		$42,680
Alcoholic Beverage	$49,152	$163,840	$64,020	$213,400
Total Revenue		$163,840		$213,400
Cost of Goods Sold		-$40,960		-$53,350
Gross Profit		$122,880		$160,050
Operating Expenses:
Payroll Expenses	-$24,576		-$32,010
Power & Fuel	-$28,672		-$37,345
Cleaning Charges	-$8,192		-$10,670
Electricity	-$2,458		-$3,201
Rent	-$1,500		-$1,500
General Expenses	-$12,288		-$16,005
Total Operating Expenses		-$77,686		-$100,731
Net Profit before Tax		$45,194		$59,319
Income Tax Expenses		-$13,558		-$17,796
Net Profit for the month		$31,636		$41,523

 

The issue presented in the question is that the data in regards to the income sources that have been provided in the budgeted statements in Part A could be derived from the financial statements or the accounting records that have been maintained for the purpose of carrying out the financial proceedings. The books that are daily maintained by the accountant of the business entity might also help in the process of collection of relevant data (Greef caes et al., 2017).

The documents needed for gaining data in case of the following financial components are as follows:

• Rent – payment documents or slips
• Wages and salaries – expense registers (salary or wage bills)
• Licenses – license papers
• Maintenance and repairs – expense register
• Asset purchases: Cooking equipment, furniture, motor vehicles – asset register
• Food purchases – purchase invoice
• Beverage purchases – purchase invoice
• Insurance Accounting taxes – tax invoice or bill

BALANCE SHEET:
ASSETS	$	LIABILITIES	$
Inventory: Food	25,000	Bank Loan	15,500
Inventory: Beverage	23,800	GST Payable	895
Furniture & Fittings	12,000	Trade Creditors	9,500
Trade Debtors	18,300
Bank Account	7,500
Computers	8,000
Petty Cash	1,200
Building & Improvements	9,500	Total Liabilities	25,895
		Proprietorship/Owner's Equity	79,405
TOTAL	105,300	TOTAL	105,300

 

REVENUE	EXPENSES
Fees received	Cash Purchases
Credit sales	Bought Goods for Resale
Commission received	Bank fees & charges
Cash Sales	Salaries/Wages
	Interest paid
	Telephone/Mobile & Internet
	Supplies bought
	Donations made

The four examples of source documents include:

• Invoice bills
• Registration deeds
• Delivery dockets
• Quotes

The trial balance ensures that the credit balance equals the debit balance

The Cash flow equation is Operating cash flow = Net Cash or Operating income before depreciation minus taxes that have been adjusted in accordance to changes in working capital

A budget refers to the planned estimates that have been undertaken by the management of an organization for the purpose of strategizing and controlling the revenue and the expenditure for a specific time period in the future. A budget helps in providing a projected view into the future estimates of business along with forecasting the profits or losses for business that can be incurred via the estimates (Brown caes et al., 2016).

A zero based budgeting refers to that method of budgeting that leads to the justification of each of the new expenses that have been incurred. The essential process that a zero based budgeting follows is that it starts from a zero base. This means that the total inflow of cash in business minus total outflow of cash must be equal to zero. This will facilitate the allocation of each and every monetary component of business (Brown caes et al., 2016).

A rolling budget refers to that budget which is updated on a continuous basis for the purpose of addition of a new budget with the completion of the current budgeted period. The rolling budget facilitates the extension of the current thus making sure that the business is continuously supported by a financial budget (Brown caes et al., 2016).

The term variance refers to the difference between the two financial components. However, the term budget is a relevant concept in case of the budgets. In case of the budgets, relevance refers to the difference between the budgeted estimates and the actual estimates. A variance can be favorable in nature indicating that the budgeted estimated has been more or less accurate in comparison to the real expense or income that has been incurred by business. However, in case of an unfavorable variance the estimated income does not match with the real scenario. A variance analysis is essentially drawn in order to measure the effectiveness of a prepared budget.

• Budgets (estimated income) – financial budget
• Budgets ( estimated of costs) – overhead budget; material budget; labor budget;
• Budgets (expected financing activities and summary results of the coming period) – revenue budget

This particular question is missing the budgeted rate at which the crate of mangoes were sole therefore, cannot be answered.

Trial Balance

The trial balance ensures that the credit balance equals the debit balance

Revenue	$	$
Sales	1,500
Less: Cost of goods	500
Gross Profit		1,000
Less: Operating Expenses
Electricity	50
Telephone	60
Advertising	100
Total Operating Expenses	210
Profit before Tax		790
Income Tax	150
PROFIT AFTER TAX		640

Gross profit is calculated as a 66.67% of revenue.

Profit after Tax is calculated as a 42.67% of revenue.

Operating Expenses is calculated as a 14.00% of revenue.

Income Tax is calculated as a 10.00% of revenue.

Cost of Goods Sold is calculated as a 33.33% of revenue.

ASSETS	$	$
Cash	5,000
Stock	8,000
Vehicle	10,000
Equipment	5,000
Total Assets		28,000
Owners Equity
Capital	18,000
Total Owners Equity		18,000
Liabilities
Loans	10,000
Total Liabilities		10,000
Liabilities + Owners Equity		28,000

Cash receipts refer to the receipts in the form of cash that the business has received in the form of cash from its debtors or as a payment for other related business transactions.

Cash sales refer to the sales that have been carried out by business in a particular financial year and the proceedings of which have been received by it in cash.

Petty cash refers to the cash account that is maintained by the accountant of a particular organization for carrying out the operations in the daily course of business.

Purchase journal refers to the journal that reveals the total amount of purchase that is undertaken by business in a particular financial year. In a purchase related journal entry, the purchase account is debited and the cash account is credited.

A payroll refers to the wages and salaries that is paid by an organization to its employees. A payroll journal consists of the entries in relation to the payroll of a particular organization.

The current ratio refers to the ratio that shows the liquidity position of an organization by reflecting its ability to pay off its current liabilities with the help of its current assets. The formula for calculating it is Current Assets /  Current Liabilities.

The acid test ratio is of the similar nature as of current ratio.  However, the formula for calculating it is (Current Assets – stock) / Current Liabilities.

Accounts receivable as a percentage of total revenue refers to the total portion of sales that has been carried out on the basis of credit.

Accounts receivable turnover ratio reveals the total amount of credit sales that have been carried out by business and the effectiveness of it. The formula for calculating such a ratio is (net credit sales) / (average accounts receivables)

The return on assets refers to the ability of a company to optimally utilize its assets so as to ensure the maximum return from them. The formula is (Net income) / (total assets).

The net return on assets is same as return on assets. However, the formula is (net income) / (fixed assets + working capital)

The return o stockholder’s equity refers to the return that is obtained by business from the shareholders equity. It is calculated by (net income) / shareholder’s equity

The inventory turnover refers to the ability of the business to obtain returns from its inventory. It is calculated by (cost of goods sold)/ (average inventory)

The working capital turnover ratio refers to the ability of the business to obtain returns from its working capital. It is calculated by (net sales /  working capital)

The gross profit margin refers to the gross profit that is left after deducting the cost of goods sold from the total revenue. It is calculated by (gross profit) / revenue.

The net profit margin ratio refers to the net profit that is left after deducting the operating and all other expenses from the gross profit.

The asset turnover ratio refers to the ability of a business entity to obtain the maximum returns from its assets. It is calculated by (net sales) / (total assets).

It is the difference between the company sales and variable expenses that is expressed as a percentage.

It is the difference between the intrinsic value of a stock and its respective market price.

The ownership ratio measures the usefulness of the funds contributed by the owners by further measuring the assets financed by those funds.

The breakeven point refers to the point at which the total sales equals the cost. Post the breakeven point, the company deals in profit.

The sales increase refers to the total increase in sales that ultimately leads to increase in the total revenue incurred by the firm.

The cost justification refers to the justification behind the need of an item of expenditure with the support of proper evidences and documentation.

The sales objective refers to the primary objectives that are achieved by the firm while carrying out the sales of its manufactured products.

The food cost percentage refers to the percentage of the price of a particular food item that accounts for the cost of preparing that particular food item. The food cost percentage can be derived by dividing the total price of the food by the cost and then expressing it as a percentage.

The gross profit on food refers to the total revenue derived by the sales of the food items minus cost of preparing the food.

Food stock turn refers to the effectiveness of the food stock that is utilized by the business entity and is calculated by (total sales) / (total stock).

The part of the price of the beverages that accounts for their cost is referred to as beverage cost percentage.

Total payroll refers to the wages and salaries and other monetary benefits that are paid by an organization to its staff or employees.

The cost of goods sold refers to the cost that is incurred by the business entity in manufacturing the sold product or in imparting a service.

The gross profit margin refers to the gross profit that is left after deducting the cost of goods sold from the total revenue. It is calculated by (gross profit) / revenue.

Debt to Equity ratio refers to the portion of financing that a business entity acquires by borrowing it from outside parties and the portion of financing facilitated by the funds by the equity shareholders. It is calculated by (short term debt + long term debt + other fixed payments) / Shareholder’s equity

Overhead costs refer to those costs that are incurred in order to run a business but the overhead costs cannot be attributed to any specific business activity. It is useful in estimating the specific costs.

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