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c) Prepare a schedule of monthly cash budget with borrowings and repayments for January, February and March. (Leave no cells blank - be certain to...

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:

Actual Forecast Additional Information
November $ 320,000 January $ 520,000 April forecast $ 460,000
December 460,000 February 560,000
March 470,000

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Of the firm's 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 35 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 5 percent of sales and is also paid in the month of sales. Overhead expense is $34,000 in cash per month.

Depreciation expense is $11,200 per month. Taxes of $9,200 will be paid in January, and dividends of $8,000 will be paid in March. Cash at the beginning of January is $104,000, and the minimum desired cash balance is $99,000.

c) HARRY’S CARRY-OUT STORES Cash Budget January February March Prepare a schedule of 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. Omit the "$" sign in your response.) Total cash receipts $ $ $ Total cash payments Net cash flow Beginning cash balance Cumulativ e cash balance Monthly loan or (repaymen t) Cumulativ e loan balance Ending cash balance $ $ $ 455,000 525,000 505,000 511,200 538,000 465,000 -56,200 -13,000 40,000 104,000 99,000 99,000 47,800 86,000 139,000
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This question was asked on Jan 29, 2013.

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