Reference no: EM132540643

Jim Daniels Health Products has eight stores. The firm wants to expand by two more stores and needs a bank loan for 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:

Actual Forecast Additional Information November$620,000 January$700,000 April forecast$750,000 December640,000 February740,000 March760,000

Of the firm's sales, 40 percent are for cash and the remaining 60 percent are on credit. Of credit sales, 30 percent are paid in the month after sale and 70 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 $38,000 in cash per month; Amortization expense is $12,100 per month. Taxes of $10,000 will be paid in January and dividends of $6,000 will be paid in March. Cash at the beginning of January is $122,000, and the minimum desired cash balance is $117,000.

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

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

c. Prepare schedule for monthly cash budget for January, February and March.