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Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 4-25 (Algo) Complete cash budget [LO4-2]
Jayden's Carryout Stores has eight locations. The firm wishes to expand by two more stores and needs a bank loan to do this. Mrs.
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:
November
December
Actual
$ 320,000 January
340,000 February
March
Forecast
Additional Information
$ 400,000 April forecast
440,000
410,000
$ 400,000
of the firm's sales, 60 percent are for cash and the remaining 40 percent are on credit. Of credit sales, 20 percent are paid in the
month after sale and 80 percent are paid in the second month after the sale. Materials cost 20 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 50 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 $31,000 in cash per month.
Depreciation expense is $10,600 per month. Taxes of $8,600 will be paid in January, and dividends of $5,000 will be paid in March.
Cash at the beginning of January is $92,000, and the minimum desired cash balance is $87,000.
a. Prepare a schedule of monthly cash receipts for January, February, and March.
Jayden's Carryout Stores.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcba025fa-3754-4b4f-a23c-1cb6cf369fe2%2Fac96c464-7228-4d17-8d2b-027f4c0ed05a%2F3pn458h_processed.jpeg&w=3840&q=75)
Transcribed Image Text:ces
Problem 4-25 (Algo) Complete cash budget [LO4-2]
Jayden's Carryout Stores has eight locations. The firm wishes to expand by two more stores and needs a bank loan to do this. Mrs.
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:
November
December
Actual
$ 320,000 January
340,000 February
March
Forecast
Additional Information
$ 400,000 April forecast
440,000
410,000
$ 400,000
of the firm's sales, 60 percent are for cash and the remaining 40 percent are on credit. Of credit sales, 20 percent are paid in the
month after sale and 80 percent are paid in the second month after the sale. Materials cost 20 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 50 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 $31,000 in cash per month.
Depreciation expense is $10,600 per month. Taxes of $8,600 will be paid in January, and dividends of $5,000 will be paid in March.
Cash at the beginning of January is $92,000, and the minimum desired cash balance is $87,000.
a. Prepare a schedule of monthly cash receipts for January, February, and March.
Jayden's Carryout Stores.
Transcribed Image Text:4
b. Prepare a schedule of monthly cash payments for January, February, and March.
Note: Input all amounts as positive. Leave no cells blank be certain to enter O wherever required.
Payments for purchases
Labor expense
Selling and administrative
Overhead
Taxes
Dividends
Total cash payments
Jayden's Carryout Stores.
Cash Payments Schedule
January
February
March
c. Prepare a monthly cash budget with borrowings and repayments for January, February, and March
Note: Negative amounts should be indicated by a minus sign. Assume the January beginning loan balance is $0. Leave no
cells blank be certain to enter O wherever required.
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