Question

The firm wishes to expand by tao more stores and neods a bank loan to do this. Mr. Wison, 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 Addiiona November$680,000 Janwary $760,000 Apni forecast December700,000 February 800,000 $580,000 March 590,000 45 percent are for cash and the remaining 55 percent are on credit. Of credit sales, 40 percent are paid in the month after sale and 60 percent are paid in the second d each month in an amount sufficient to cover the following month's expected sales. Materials are of the firm's sales, month after the sale. Materials cost 25 percont of sales and are purchased and receive paid for in the month after they are received. Labor expense is 50 sales and is paid for in the nonth of sales. Selling and administrative expense is 15 percent of sales and is 10 40 ill be pd i Januay and dvidands of $14.0 ail le pahe begining ef January a $128.000 and also paid in the month of sales. Overhead expense is $40,000 in cash per month the minimum desired cash balance is $123,000. a. Prepare a schedule of monthly cash receipts for January, February, and March. Harry's Carryout Stores Cash Receipts Schedule November December January February March Sales Credt sales Cash sales One month after sale Two months after sale Total cash receipts

Answer 1

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