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:

ActualForecastAdditional InformationNovember$260,000January$400,000April forecast$400,000December340,000February440,000March410,000Of the firm's sales, 60 percent are for cash and the remaining 40 percent are on credit. Of credit sales, 20 percent are paid in the month after sale and 80 percent are paid in the second month after the sale. Materials cost 20 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 50 percent of sales and is paid for in the month of sales. Selling and administrative expense is 15 percent of sales and is also paid in the month of sales. Overhead expense is $31,000 in cash per month.

Depreciation expense is $10,600 per month. Taxes of $8,600 will be paid in January, and dividends of $5,000 will be paid in March. Cash at the beginning of January is $92,000, and the minimum desired cash balance is $87,000.

a.Prepare a schedule of monthly cash receipts for January, February, and March.

Harry's Carry-out Stores

Cash Receipts Schedule

NovemberDecemberJanuaryFebruaryMarchSales$$$$$Credit salesCollections:Cash sales$$$One month after saleTwo months after saleTotal cash receipts$$$

b.Prepare a schedule ofmonthly cash payments for January, February, and March.

Harry's Carry-out Stores

Cash Payments Schedule

JanuaryFebruaryMarchPayments for purchases$$$Labor expenseSelling and administrativeOverheadTaxesDividendsTotal cash payments$$$

c.Prepare a monthly cash budget with borrowings and repayments for January, February, and March.(Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign. Assume the January beginning loan balance is $0.)

Harry's Carry-out Stores

Cash Budget

JanuaryFebruaryMarchTotal cash receipts$$$Total cash paymentsNet cash flow$$$Beginning cash balanceCumulative cash balanceMonthly loan (or repayment)Ending cash balance$$$Cumulative loan balance$$$