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 forecasted sales figures:

Actual			Forecast			Additional Information
November	$ 210,000		January	$ 300,000		April forecast	$ 350,000
December	240,000		February	340,000
			March	360,000

Of the firms sales, 50 percent are for cash and the remaining 50 percent are on credit. Of credit sales, 25 percent are paid in the month after sale and 75 percent are paid in the second month after the sale. Materials cost 40 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 30 percent of sales and is paid for in the month of sales. Selling and administrative expense is 10 percent of sales and is also paid in the month of sales. Overhead expense is $28,500 in cash per month.

Depreciation expense is $10,100 per month. Taxes of $8,100 will be paid in January, and dividends of $2,500 will be paid in March. Cash at the beginning of January is $82,000, and the minimum desired cash balance is $77,000.

a.

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

Harrys Carryout Stores Cash Receipts Schedule
	November	December	January	February	March
Sales	$	$	$	$	$
Credit sales
Collections:
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.

Harrys Carryout Stores Cash Payments Schedule
	January	February	March
Payments for purchases	$	$	$
Labor expense
Selling and administrative
Overhead
Taxes
Dividends
Total 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.)

Harrys Carryout Stores Cash Budget
	December	January	February	March
Total cash receipts		$	$	$
Total cash payments
Net cash flow		$	$	$
Beginning cash balance
Cumulative cash balance		$	$	$
Monthly loan (repayment)
Ending cash balance		$	$	$
Cumulative loan balance	$	$	$	$