10. 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 can present anacceptable three-month financial plan for January through March. Thefollowing are actual and forecast sales figures:ActualNovember $320, 000 January $400,000December 340,000 February 440,000March 410,000ForecastSalesCredit salesOf the firm's sales, 60 percent are for cash and the remaining 40 percent areon 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 cost 20 percentof sales and are purchased and received each month in an amount sufficientto cover the following month's expected sales. Materials are paid for in themonth after they are received. Labor expense is 50 percent of sales and ispaid for in the month of sales. Selling and administrative expense is 15percent of sales and is paid in the month of sales. Overhead expense is$31,000 in cash per month.Cash salesOne month after saleTwo months after saleDepreciation expense is $10,600 per month. Taxes of $8,600 will be paid inJanuary, and dividends of $5,000 will be paid in March. Cash at the beginningof January is $92,000, and the minimum desired cash balance is $87,000.Total cash receiptsa. Prepare a schedule of monthly cash receipts for January, February, andMarch.Payments for purchasesLabor expenseSelling and administrativeOverheadTaxesDividendsTotal cash paymentsAprilforecastNovemberAdditionalInformationHarry's Carryout StoresCash Receipts ScheduleDecemberHarry's Carryout StoresCash Payments ScheduleJanuary$400,000JanuaryFebruaryb. Prepare a schedule of monthly cash payments for January, February, andMarch.FebruaryMarchMarchc. Prepare a monthly cash budget with borrowings and repayments forJanuary, February, and March. (Negative amounts should be indicated by aminus sign. Assume the January beginning loan balance is $0.)

Cash budgets are important in accounting. They show different sources of cash inflows and outflows…

a. Prepare a schedule of monthly cash receipts for January, February, and March. Sales Credit sales Cash sales One month after sale Two months after sale Total cash receipts November Payments for purchases Labor expense Selling and administrative Overhead Taxes Dividends Total cash payments Harry's Carryout Stores Cash Receipts Schedule December January Harry's Carryout Stores Cash Payments Schedule January b. Prepare a schedule of monthly cash payments for January, February, and March. February February March 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.)

a. Prepare a schedule of monthly cash receipts for January, February, and March. Sales Credit sales Cash sales One month after sale Two months after sale Total cash receipts November Payments for purchases Labor expense Selling and administrative Overhead Taxes Dividends Total cash payments Harry's Carryout Stores Cash Receipts Schedule December January Harry's Carryout Stores Cash Payments Schedule January b. Prepare a schedule of monthly cash payments for January, February, and March. February February March 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.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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