Harry’s CarryoutStores has eight locations. The firm wishes to expand by two morestores and needs a bank loan to do this. Mr. Wilson, the banker,will finance construction if the firm can present an acceptablethree-month financial plan for January through March. The followingare actual and forecast sales figures:

Actual			Forecast			Additional Information
November	$560,000		January	$640,000		April forecast	$520,000
December	580,000		February	680,000
			March	530,000

Of the firm’s sales,50 percent are for cash and the remaining 50 percent are on credit.Of credit sales, 20 percent are paid in the month after sale and 80percent are paid in the second month after the sale. Materials cost25 percent of sales and are purchased and received each month in anamount sufficient to cover the following month’s expected sales.Materials are paid for in the month after they are received. Laborexpense is 50 percent of sales and is paid for in the month ofsales. Selling and administrative expense is 15 percent of salesand is paid in the month of sales. Overhead expense is $25,000 incash per month.

Depreciation expense is $11,800 per month. Taxes of $9,800 willbe paid in January, and dividends of $11,000 will be paid in March.Cash at the beginning of January is $116,000, and the minimumdesired cash balance is $111,000.

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

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

c. Prepare a monthly cash budget with borrowingsand repayments for January, February, and March. (Negativeamounts should be indicated by a minus sign. Assume the Januarybeginning loan balance is $0.)