Harry’s Carryout Stores has eight locations. The firm wishes toexpand by two more stores and needs a bank loan to do this. Mr.Wilson, the banker, will finance construction if the firm canpresent an acceptable three-month financial plan for Januarythrough March. The following are actual and forecast sales figures:Actual Forecast Additional Information November $240,000 January$320,000 April forecast $360,000 December 260,000 February 360,000March 370,000 Of the firm’s sales, 60 percent are for cash and theremaining 40 percent are on credit. Of credit sales, 30 percent arepaid in the month after sale and 70 percent are paid in the secondmonth after the sale. Materials cost 30 percent of sales and arepurchased and received each month in an amount sufficient to coverthe following month’s expected sales. Materials are paid for in themonth after they are received. Labor expense is 40 percent of salesand is paid for in the month of sales. Selling and administrativeexpense is 15 percent of sales and is paid in the month of sales.Overhead expense is $22,000 in cash per month. Depreciation expenseis $10,200 per month. Taxes of $8,200 will be paid in January, anddividends of $3,000 will be paid in March. Cash at the beginning ofJanuary is $84,000, and the minimum desired cash balance is$79,000.

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

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

c. Prepare a monthly cash budget with borrowings andrepayments for January, February, and March. (Negative amountsshould be indicated by a minus sign. Assume the January beginningloan balance is $0.)