Harrys 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			Forecast			Additional Information
November	$600,000		January	$680,000		April forecast	$540,000
December	620,000		February	720,000
			March	550,000

Of the firms sales, 50 percent are for cash and the remaining 50 percent are on credit. Of credit sales, 50 percent are paid in the month after sale and 50 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 months 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 $38,000 in cash per month.

Depreciation expense is $12,000 per month. Taxes of $10,000 will be paid in January, and dividends of $12,000 will be paid in March. Cash at the beginning of January is $120,000, and the minimum desired cash balance is $115,000.

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

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

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.)

**Somehow I messed up and I cannot figure out what I did wrong.

Answer is complete but not entirely correct. $ $ Sales Credit sales Cash sales One month after sale Two months after sale Total cash receipts Harry's Carryout Stores Cash Receipts Schedule November December January $ 600,000 $ 620,000 $ 680,000 300,000 310,000 340,000 340,000 62,000 240,000 642,000 February 720,000 360,000 360,000 68,000 248,000 676,000 March 550,000 275,000 275,000 72,000 272,000 619,000 $ $ $ Answer is complete but not entirely correct. Payments for purchases Labor expense Selling and administrative Overhead Taxes Dividends Total cash payments Harry's Carryout Stores Cash Payments Schedule January February $ 136,000 $ 144,000 $ 54,400 576,000 204,000 216,000 38,000 38,000 10,000 March 110,000 440,000 165,000 38,000 12,000 765,000 $ 442,400 $ 974,000 $ X Answer is not complete. 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 Harry's Carryout Stores Cash Budget January February March $ 624,000 $ 676,000 $ 619,000 (442,400) (974,000) (765,000) 181,600 (298,000) (146,000) 120,000 115,000 115,000 301,600 (183,000) (31,000) 301,600 (183,000) (31,000)