[majohn5]

I have redone some answers but in regard to total expense and net cash flow I am don't so sure I have complete these correctly. Please can someone tell me if I am on the right track.

Juan's Taco Company has restaurants in five college towns. Juan wants to expand into Austin and College Station and needs a bank loan to do this. Mr. Bryan, the banker, will finance construction if Juan can present an acceptable three-month financial plan for January through March. Following are actual and forecasted sales figures:
Actual Forecast Additional Information
November $120,000 January $190,000 April forecast $230,000
December 140,000 February 210,000
March 230,000

Of Juan's sales, 30 percent are for cash and the remaining 70 percent are on credit. Of credit sales, 40 percent are paid in the month after sale and 60 percent are paid in the second month after the sale. Materials cost 20 percent of sales and are paid for in cash. Labor expense is 50 percent of sales and is also paid in the month of sales. Selling and administrative expense is 5 percent of sales and is also paid in the month of sales. Overhead expense is $12,000 in cash per month; depreciation expense is $25,000 per month. Taxes of $20,000 and dividends of $16,000 will be paid in March. Cash at the beginning of January is $70,000, and the minimum desired cash balance is $65,000. For January, February, and March, prepares a schedule of monthly cash receipts, monthly cash payments, and a complete monthly cash budget with borrowings and repayments.



November December January February March
Sales 120,000 140,000 190,000 210,000 230,000
Cash sales (30%) 36,000 42,000 57,000 63,000 69,000
Collections (40%) 36,600 39,200 53,200 58,000
Collections (60%) 50,400 58,800 79,800




January February March
Payments for Material Purchases
(20% of current month’s sales) 38,000 42,000 46,000
Labor Expense (50% of sales) 95,000 105,000 115,000
Selling and Admin. Exp. 9,500 10,500 11,500
(5% of sales)
Overhead 12,000 12,000 12,000

Taxes 20,000


Dividends 16,000

Depreciation expense 25,000 25,000 25,000
Total expense 179,500 194,500 245,500




January February March
Total Cash Receipts
Total Cash Payments
Net Cash Flow 10,500 15,500 -15,500

[morgaine300]

Can you pretty please keep this to one thread so we don't get all confused. Thanks.