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 salesfigures:

Actual			Forecast			Additional Information
November	$600,000		January	$680,000		April forecast	$540,000
December	620,000		February	720,000
			March	550,000

Of the firm’s sales, 50 percent are for cash and the remaining50 percent are on credit. Of credit sales, 50 percent are paid inthe month after sale and 50 percent are paid in the second monthafter 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 20 percent of sales and is paid in the month of sales.Overhead expense is $38,000 in cash per month.

Depreciation expense is $12,000 per month. Taxes of $10,000 willbe paid in January, and dividends of $12,000 will be paid in March.Cash at the beginning of January is $120,000, and the minimumdesired cash balance is $115,000.

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

b. Prepare a schedule of monthly cash paymentsfor 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.)