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:

Actual Forecast Additional Information

November $ $200,000$ January $ $280,000$ April forecast $ $330,000$

December $220,000$ February $320,000$

March $340,000$

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 $40$ percent of sales and is paid in the month of sales. Selling and administrative expense is $5$ percent of sales and is also paid in the month of sales. Overhead is $$28,000$ in cash per month; amortization expense is $$10,000$ per month. Taxes of $$8,000$ will be paid in January and dividends of $$2,000$ will be paid in March. Cash at the beginning of January is $$80,000$ and the minimum desired cash balance is $$75,000.$

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

Jim Daniels Health Products

Cash Receipts Schedule

November December January February March April

Sales $

$

$

$

$

$

Credit sales

Cash sales

Collections in the month after credit sales

Collections two months after credit sales

Total cash receipts $

$

$

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

Jim Daniels Health Products

Cash Payments Schedule

January February March

Payments for purchases $

$

$

Labour expense

Selling and administrative expense

Overhead

Taxes

Dividends

Total cash payments $

$

$

c$.$ Prepare a schedule of monthly cash budget with borrowings and repayments for January, February and March. $($Omit $ sign in your response. 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.$)$

Jim Daniels Health Products

Cash Budget

January February March

Total cash receipts $

$

$

Total cash payments

Net cash flow

Beginning cash balance

Cumulative cash balance

Monthly loan or $($repayment$)$

Cumulative loan balance

Ending cash balance $

$

$