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

ActualForecastAdditional InformationNovember$400,000January$480,000April forecast$530,000December420,000February520,000March540,000

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 following month's expected sales. Materials are paid for in the month after they are received. Labour expense is 50 percent of sales and is paid in the month of sales. Selling and administrative expense is 4 percent of sales and is also paid in the month of sales. Overhead is $33,000 in cash per month; Amortization expense is $11,000 per month. Taxes of $9,000 will be paid in January and dividends of $7,000 will be paid in March. Cash at the beginning of January is $100,000, and the minimum desired cash balance is $95,000.

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

Jim Daniels Health Products

Cash Receipts Schedule

NovemberDecemberJanuaryFebruaryMarchAprilSales$$$$$$Credit salesCash salesCollections in the month

after creditsalesCollections two months

aftercredit salesTotal cash receipts$$$

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

Jim Daniels Health Products

Cash Payments Schedule

JanuaryFebruaryMarchPayments for purchases$$$Labour expenseSellingandadministrativeexpenseOverheadTaxesDividendsTotal cash payments$$$

c.Prepare schedule of monthly cash budget with borrowings and repayments for January, February and March.(Do not leave any empty spaces; input a 0 wherever it is required. Negative answers and amounts to be deducted should be indicated by a minus sign.)

Jim Daniels Health Products

Cash BudgetJanuaryFebruaryMarchTotal cash receipts$$$Total cash paymentsNet cash flowBeginning cash balanceCumulative cash balanceMonthly loan or (repayment)Cumulative loan balanceEnding cash balance$$$

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