The Red Lantern, a local Thai restaurant, expects sales to be $500,000 in January. Its average customer restaurant bill is $40. Only 20% of the restaurant bills are paid with cash; 70% are paid with credit cards and 10% with debit cards. The transaction fees charged by the credit and debit card issuers are as follows:

Credit cards: $0.50 per transaction _ 2% of the amount charged

Debit cards: $0.22 per transaction _ 1% of the amount charged

Requirements

1. How much of the total sales revenue is expected to be paid in cash?

2. How many customer transactions does the company expect in January?

3. How much of the total sales revenue is expected to be paid with credit cards?

4. How many customer transactions will be paid for by customers using credit cards?

5. When budgeting for January’s operating expenses, how much should the restaurant expect to incur in credit card transaction fees?

6. How much of the total sales revenue is expected to be paid with debit cards?

7. How many customer transactions will be paid for by customers using debit cards?

8. When budgeting for January’s operating expenses, how much should the restaurant expect to incur in debit card transaction fees?

9. How much money will be deposited in the restaurant’s bank account during the month of January related to credit and debit card sales? Assume the credit and debit card issuers deposit the funds on the same day the transactions occur at the restaurant (there is no processing delay).

10. What is the total amount of money that the restaurant expects to deposit in its bank account during the month of January from cash, credit card, and debit card sales? Again assume the credit and debit card issuers deposit the funds on the same day that the transaction occurs.



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