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 forecast sales figures: Actual Additional Information $590,000 November $700,000 January $780,000 April forecast December Forecast 720,000 February March 820,000 600,000 Of the firm's sales, 50 percent are for cash and the remaining 50 percent are on credit. Of credit sales, 45 percent are paid in the month after sale and 55 percent are paid in the second month after the sale. Materials cost 30 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 40 percent of sales and is paid for in the month of sales. Selling and administrative expense is 20 percent of sales and is paid in the month of sales. Overhead expense is $46,000 in cash per month. Depreciation expense is $12,500 per month. Taxes of $10,500 will be paid in January, and dividends of $14,500 will be paid in March. Cash at the beginning of January is $130,000, and the minimum desired cash balance is $125,000. a. Prepare a schedule of monthly cash receipts for January, February, and March. Sales Credit sales Cash sales One month after sale Two months after sale Total cash receipts November $ Harry's Carryout Stores Cash Receipts Schedule December 700,000 $ 720,000 $ January February March 780,000 $ 820,000 $ 600,000 350,000 360,000 390,000 410,000 300,000 390,000 410,000 300,000 162,000 175,500 184,500 192,500 198,000 214,500 $ 744,500 $ 783,500 $ 699,000 b. Prepare a schedule of monthly cash payments for January, February, and March. Harry's Carryout Stores Cash Payments Schedule January February March Payments for purchases $ 234,000 $ 246,000 $ Labor expense 312,000 328,000 Selling and administrative 156,000 164,000 180,000 240,000 120,000 Overhead 46,000 46,000 46,000 Taxes 10,500 Dividends 14,500 Total cash payments $ 758,500 $ 784,000 $ 600,500 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.) Total cash receipts Total cash payments Harry's Carryout Stores Cash Budget January February March Net cash flow 0 0 0 Beginning cash balance Cumulative cash balance 0 0 0 Monthly loan (or repayment) Ending cash balance 0 0 0 Cumulative loan balance