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 November $520,000 January December 540,000 February March Forecast Of the firm's sales, 50 percent are for cash and the remaining 50 percent are on credit. Of credit sales, 50 percent are paid in the month after sale and 50 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 30 percent of sales and is paid for in the month of sales. Selling and administrative expense is 20 percent of sales and is paid in the month of sales. Overhead expense is $36,000 in cash per month. Sales Credit sales Depreciation expense is $11,600 per month. Taxes of $9,600 will be paid in January, and dividends of $10,000 will be paid in March. Cash at the beginning of January is $112,000, and the minimum desired cash balance is $107,000. a. Prepare a schedule of monthly cash receipts for January, February, and March. Cash sales One month after sale Two months after sale Additional Information $600,000 April forecast $500,000 640,000 510,000 Total cash receipts November Harry's Carryout Stores Cash Receipts Schedule December $ January 0 $ February 0 $ March
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 November $520,000 January December 540,000 February March Forecast Of the firm's sales, 50 percent are for cash and the remaining 50 percent are on credit. Of credit sales, 50 percent are paid in the month after sale and 50 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 30 percent of sales and is paid for in the month of sales. Selling and administrative expense is 20 percent of sales and is paid in the month of sales. Overhead expense is $36,000 in cash per month. Sales Credit sales Depreciation expense is $11,600 per month. Taxes of $9,600 will be paid in January, and dividends of $10,000 will be paid in March. Cash at the beginning of January is $112,000, and the minimum desired cash balance is $107,000. a. Prepare a schedule of monthly cash receipts for January, February, and March. Cash sales One month after sale Two months after sale Additional Information $600,000 April forecast $500,000 640,000 510,000 Total cash receipts November Harry's Carryout Stores Cash Receipts Schedule December $ January 0 $ February 0 $ March
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:### Harry’s Carryout Stores Financial Planning
Harry’s Carryout Stores has eight locations and aims to expand by opening two more stores. To achieve this, they need a bank loan and must present an acceptable three-month financial plan for January through March. Below are the actual and forecast sales figures:
#### Actual and Forecast Sales Figures
| Month | Actual Sales | Forecast Sales | Additional Information |
|------------|--------------|----------------|-------------------------|
| November | $520,000 | | |
| December | $540,000 | | |
| January | | $600,000 | |
| February | | $640,000 | |
| March | | $510,000 | |
| April | | | $500,000 |
**Sales Composition and Terms:**
- 50% of monthly sales are for cash.
- 50% are on credit:
- 50% of credit sales are paid in the month after sale.
- 50% of credit sales are paid in the second month after sale.
**Expenditure Breakdown:**
- Materials: 40% of sales, purchased and paid in the month after they are received.
- Labor: 30% of sales, paid in the month of sales.
- Selling and administrative expenses: 20% of sales, paid in the month of sales.
- Overhead expenses: $36,000 in cash per month.
- Depreciation: $11,600 per month.
- Taxes: $9,600 (to be paid in January).
- Dividends: $10,000 (to be paid in March).
**Additional Information:**
- Initial Cash at the beginning of January: $112,000.
- Minimum Desired Cash Balance: $107,000.
#### Task: Prepare a Schedule of Monthly Cash Receipts for January, February, and March
The provided table outlines the cash receipts schedule for Harry’s Carryout Stores from November to March. However, the table is incomplete and requires the calculation and input of the relevant data.
**Cash Receipts Schedule Chart:**
| Category | November | December | January | February | March |
|-----------------------|----------|----------|----------|----------|--------|
| Sales | | | | | |
| Credit Sales | | | | |
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