Jim Daniels Health Products has eight stores. The firm wants to expand by two more stores and needs a bank loan to do this. Mr. Hewitt, the banker, will finance construction if the firm can present an acceptable three-month financial plan for January through March. Following are actual and forecasted sales figures: November December Actual Forecast $620,000 January 640,000 February March $700,000 April forecast 740,000 760,000 Additional Information $750,000 Of the firm's sales, 40 percent are for cash and the remaining 60 percent are on credit. Of credit sales, 30 percent are paid in the month after sale and 70 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 current month's expected sales. Materials are paid for in the month they are received. Labour expense is 50 percent of sales and is paid in the month of sales. Selling and administrative expense is 8 percent of sales and is also paid in the month of sales. Overhead is $38,000 in cash per month; amortization expense is $12,100 per month. Taxes of $10,000 will be paid in January and dividends of $6,000 will be paid in March. Cash at the beginning of January is $122,000 and the minimum desired cash balance is $117,000. a. Prepare a schedule of monthly cash receipts for January, February and March. Sales Credit sales Cash sales Collections in the month after credit sales Collections two months after credit sales Total cash receipts Jim Daniels Health Products Cash Receipts Schedule November December January $ 700000 February $ 740000 March $ 760000 April $ $ $ 420000 280000 444000 456000 296000 304000 $ $ $ b. Prepare a schedule of monthly cash payments for January, February and March. Jim Daniels Health Products Cash Payments Schedule January February Payments for purchases $ 210000 $ 222000 Labour expense 350000 March $ 228000 380000 Selling and administrative expense 56000 60800 Overhead 38000 38000 38000 Taxes 10000 Dividends 6000 Total cash payments $ 664000 $ $ 712800 c. Prepare a schedule of monthly cash budget with borrowings and repayments for January, February and March. (Do not leave any empty spaces; input a 0 wherever it is required. Negative answers and amounts to be deducted should be indicated by a minus sign.) Total cash receipts Total cash payments Net cash flow Beginning cash balance Jim Daniels Health Products Cumulative cash balance Monthly loan or (repayment) Cumulative loan balance Ending cash balance Cash Budget January $ February March $ $ $ $ +A $