Juan's Taco Company has restaurants in five collegetowns. Juan wants to expand into Austin and College Stationand needs a bank loan to do this. Mr. Bryan, the banker, willfinance construction if Juan can present an acceptable three-monthfinancial plan for January through March. The following are actualand forecasted sales figures:
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Actual
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Forecast
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AdditionalInformation
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November $120,000
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January $190,000
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Aprilforecast $230,000
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December 140,000
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February 210,000
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March 230,000
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Of Juan's sales, 30 percent are for cash and the remaining70 percent are on credit. Of credit sales, 40 percent are paid inthe month after sale and 60 percent are paid in the second monthafter the sale. Materials cost 20 percent of sales and are paid forin cash. Labor expense is 50 percent of sales and it'spaid in the month of sales. Selling and administrative expense is 5percent of sales and is also paid in the month of sale. Overheadexpense is $12,000 in cash per month; depreciation expense is$25,000 per month. Taxes of $20,000 and dividends of $16,000 willbe paid in March. Cash at the beginning of January is $70,000 andthe minimum desired cash balance is $65,000.
For January, February, and March, prepare a schedule of monthly cash receipts, monthly cash payments, and a complete monthly cashbudget with borrowings and repayments.