Harry's Carryout Stores has eight locations. The firm wishes to expand by two more stores and needs a bank loan to do this. Mr. Wilson, the banker, will finance construction if the firm can present an acceptable three-month financial plan for January through March. The following are actual and forecasted sales figures: Actual Forecast Additional Information November $660,000 January S740,000 April forecast 680,000 February780,000 $570,000 December March 580,000 Of the firm's sales, 40 percent are for cash and the remaining 60 percent are on credit. Of credit sales, 40 percent are paid in the month after sale and 60 percent are paid in the second month after the sale. Materials cost 35 percent of sales and are purchased and received each month in an amount sufficient to cover the following month's expected sales. Materials are paid for in the month after they are received. Labor expense is 35 percent of sales and is paid for in the month of sales. Selling and administrative expense is 20 percent of sales and is also paid in the month of sales. Overhead expense is $34,000 in cash per month. Depreciation expense is $12,300 per month. Taxes of $10,300 will be paid in January, and dividends of $13,500 will be paid in March. Cash at the beginning of January is $126,000, and the mininum desired cash balance is $121,000 a. Prepare a schedule of monthly cash receipts for January. February, and March. Answer is complete and correct. Harry's Carryout Stores Cash Receipts Schedule December November January February March 660,000 s 680,00740,000 780,00580,000 396,000 408,00444,00046800348,000 296,000 312,000 232.000 63,200177,60187,200 237,6 244,800266,400 $ 696,800 734,400 685,600 Sales Credit sales Cash sales One month after sale Two months after sale Total cash receipts b. Prepare a schedule of monthly cash payments for January, February, and March. Answer is complete but not entirely correct. Harry's Carryout Stores Cash Payments Schedule January February March Payments for purchases Labor expense Selling and administrative Overhead Taxes Dividends Total cash payments 273,000 3s 203,000.$ 199,500 259,000 273,000203,000 156,000 116.000 40034,000 148,000 34,000 0,300 oO| 13,500 $ 724,300 S 666,000 $ 566,000 c. Prepare a monthly cash budget with borrowings and repayments for January. February, and March. (Negative amounts should be indicated by a minus sign. Assume the January beginning loan balance is $0.) Answer is complete but not entirely correct. Carryout Stores Cash Payments Schedule January March Total cash receipts Total cash payments Net cash flow Beginning cash balance Cumulative cash balance Monthly loan (or repayment) Ending cash balance Cumulative loan balance $ 696,800 734,400 685,600 (724,300) (666,000) (566,000) 119,600 126000 98500166,900 286,500 (27,500) 68.400 166,900 22,500(22,500) 144,400 98,500 121,000 286,500 22.500