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Jim Daniels Health Products has eight stores. The firm wants to expand by two more stores and needs a bank loan to do this. Mr$.$ Hewitt, the banker, will finance construction if the firm can present an acceptable three$-$month financial plan for January through March. Following are actual and forecasted sales figures:

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Actual$$Forecast$$Additional Information$$November$$520,000$January$$600,000$April forecast$$650,000$December$540,000$February$640,000$March$660,000$

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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, $40$ percent are paid in the month after sale and $60$ percent are paid in the second month after the sale. Materials cost $30$ percent of sales and are purchased and received each month in an amount sufficient to cover the current month$$s expected sales. Materials are paid for in the month they are received. Labour expense is $50$ percent of sales and is paid in the month of sales. Selling and administrative expense is $8$ percent of sales and is also paid in the month of sales. Overhead is $$36,000$ in cash per month; amortization expense is $$11,600$ per month. Taxes of $$9,500$ will be paid in January and dividends of $$3,500$ will be paid in March. Cash at the beginning of January is $$112,000$ and the minimum desired cash balance is $$107,000.$

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

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Jim Daniels Health Products

Cash Receipts Schedule$$NovemberDecemberJanuaryFebruaryMarchApril$$Sales$ $$$ $$$ $$$ $$$ $$$ $$Credit sales $$Cash sales $$Collections in the month after credit$$sales$$Collections two months after$$credit sales$$

$$Total cash receipts$$$ $$$ $$$ $$

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

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Jim Daniels Health Products

Cash Payments Schedule$$JanuaryFebruaryMarch$$Payments for purchases$ $$$ $$$ $$Labour expense $$Selling$$and$$administrative$$expense $$Overhead $$Taxes $$Dividends$$

$$Total cash payments$ $$$ $$$ $$

c$.$ Prepare a schedule of monthly cash budget with borrowings and repayments for January, February and March. $($Do not leave any empty spaces; input a $0$ wherever it is required. Negative answers and amounts to be deducted should be indicated by a minus sign.$)$

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Jim Daniels Health Products

Cash Budget$$JanuaryFebruaryMarch$$Total cash receipts$ $$$ $$$ $$Total cash payments $$

$$Net cash flow $$Beginning cash balance $$

$$Cumulative cash balance $$Monthly loan or $($repayment$)$Cumulative loan balance $$Ending cash balance$ $$$ $$$

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