Expert Q&A Done Problem 4-25 Complete cash budget [LO4-2] Harry's Carryout Stores has eight locations. The firm wishes to expand by two more stores and needs a bank loan to do this. Mr. Wilson, 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 forecast sales figures: Additional Information| January $540,000 April forecast $470,000 Actual Forecast November $460,000 December 480,000 February 580,000 March 480,000 Of the firm's sales, 50 percent are for cash and the remaining 50 percent are on credit. Of credit sales, 35 percent are paid in the month after sale and 65 percent are paid in the second month after the sale. Materials cost 40 percent of sales and are purchased and received each month in an amount sufficient to cover the following month's expected sales. Materials are paid for in the month after they are received. Labor expense is 35 percent of sales and is paid for in the month of sales. Selling and administrative expense is 15 percent of sales and is paid in the month of sales. Overhead expense is $26,000 in cash per month. Depreciation expense is $11,300 per month. Taxes of $9,300 will be paid in January, and dividends of $8,500 will be paid in March. Cash at the beginning of January is $106,000, and the minimum desired cash balance is $101,000. 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 borrowings and repayments for January, February, and March. (Negative amounts should be indicated by a minus sign. Assume the January beginning loan balance is $0.)
Expert Q&A Done Problem 4-25 Complete cash budget [LO4-2] Harry's Carryout Stores has eight locations. The firm wishes to expand by two more stores and needs a bank loan to do this. Mr. Wilson, 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 forecast sales figures: Additional Information| January $540,000 April forecast $470,000 Actual Forecast November $460,000 December 480,000 February 580,000 March 480,000 Of the firm's sales, 50 percent are for cash and the remaining 50 percent are on credit. Of credit sales, 35 percent are paid in the month after sale and 65 percent are paid in the second month after the sale. Materials cost 40 percent of sales and are purchased and received each month in an amount sufficient to cover the following month's expected sales. Materials are paid for in the month after they are received. Labor expense is 35 percent of sales and is paid for in the month of sales. Selling and administrative expense is 15 percent of sales and is paid in the month of sales. Overhead expense is $26,000 in cash per month. Depreciation expense is $11,300 per month. Taxes of $9,300 will be paid in January, and dividends of $8,500 will be paid in March. Cash at the beginning of January is $106,000, and the minimum desired cash balance is $101,000. 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 borrowings and repayments for January, February, and March. (Negative amounts should be indicated by a minus sign. Assume the January beginning loan balance is $0.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
![Expert Q&A
Done
Problem 4-25 Complete cash budget [LO4-2]
Harry's Carryout Stores has eight locations. The firm
wishes to expand by two more stores and needs a bank
loan to do this. Mr. Wilson, 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 forecast sales figures:
Actual
Forecast
Additional Information
November $460,000 January$540,000 April forecast $470,000
December 480,000 February 580,000
March 480,000|
Of the firm's sales, 50 percent are for cash and the
remaining 50 percent are on credit. Of credit sales, 35
percent are paid in the month after sale and 65 percent
are paid in the second month after the sale. Materials cost
40 percent of sales and are purchased and received each
month in an amount sufficient to cover the following
month's expected sales. Materials are paid for in the
month after they are received. Labor expense is 35
percent of sales and is paid for in the month of sales.
Selling and administrative expense is 15 percent of sales
and is paid in the month of sales. Overhead expense is
$26,000 in cash per month.
Depreciation expense is $11,300 per month. Taxes of
$9,300 will be paid in January, and dividends of $8,500
will be paid in March. Cash at the beginning of January is
$106,000, and the minimum desired cash balance is
$101,000.
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 borrowings and
repayments for January, February, and March. (Negative
amounts should be indicated by a minus sign. Assume
the January beginning loan balance is $0.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2f9bf5d0-dbdf-4434-9845-37eab0f70077%2F7400ef7e-000e-4e5c-9280-a03cc8e9d69a%2Fqsx7ai_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Expert Q&A
Done
Problem 4-25 Complete cash budget [LO4-2]
Harry's Carryout Stores has eight locations. The firm
wishes to expand by two more stores and needs a bank
loan to do this. Mr. Wilson, 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 forecast sales figures:
Actual
Forecast
Additional Information
November $460,000 January$540,000 April forecast $470,000
December 480,000 February 580,000
March 480,000|
Of the firm's sales, 50 percent are for cash and the
remaining 50 percent are on credit. Of credit sales, 35
percent are paid in the month after sale and 65 percent
are paid in the second month after the sale. Materials cost
40 percent of sales and are purchased and received each
month in an amount sufficient to cover the following
month's expected sales. Materials are paid for in the
month after they are received. Labor expense is 35
percent of sales and is paid for in the month of sales.
Selling and administrative expense is 15 percent of sales
and is paid in the month of sales. Overhead expense is
$26,000 in cash per month.
Depreciation expense is $11,300 per month. Taxes of
$9,300 will be paid in January, and dividends of $8,500
will be paid in March. Cash at the beginning of January is
$106,000, and the minimum desired cash balance is
$101,000.
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 borrowings and
repayments for January, February, and March. (Negative
amounts should be indicated by a minus sign. Assume
the January beginning loan balance is $0.)
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