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Harry's Carryout Stores has eight locations. The firm wishes to expand by two more stores and needs a bank loan to do this. Mr. 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: Actual November $540,000 December 560,000 Forecast Additional Information January $620,000 February 660,000 March 520,000 April forecast $510,000 Of the firm's sales, 30 percent are for cash and the remaining 70 percent are on credit. Of credit sales, 35 percent are paid in the month after sale and 65 percent are paid in the second month after the sale. Materials cost 35 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 45 percent of sales and is paid for in the month of sales. Selling and administrative expense is 10 percent of sales and is paid in the month of sales. Overhead expense is $20,000 in cash per month. Depreciation expense is $11,700 per month. Taxes of $9,700 will be paid in January, and dividends of $10,500 will be paid in March. Cash at the beginning of January is $114,000, and the minimum desired cash balance is $109,000.

Harry's Carryout Stores has eight locations. The firm wishes to expand by two more stores and needs a bank loan to do this. Mr. 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: Actual November $540,000 December 560,000 Forecast Additional Information January $620,000 February 660,000 March 520,000 April forecast $510,000 Of the firm's sales, 30 percent are for cash and the remaining 70 percent are on credit. Of credit sales, 35 percent are paid in the month after sale and 65 percent are paid in the second month after the sale. Materials cost 35 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 45 percent of sales and is paid for in the month of sales. Selling and administrative expense is 10 percent of sales and is paid in the month of sales. Overhead expense is $20,000 in cash per month. Depreciation expense is $11,700 per month. Taxes of $9,700 will be paid in January, and dividends of $10,500 will be paid in March. Cash at the beginning of January is $114,000, and the minimum desired cash balance is $109,000.

Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter12: Current Liabilities
Section: Chapter Questions
Problem 9PB: Pickles R Us is a pickle farm located in the Northeast. The following transactions take place: A. On...
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Harry's Carryout Stores has eight locations. The firm wishes to expand by two more stores and needs a bank loan to do this. Mr. 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: Actual November $540,000 December 560,000 Forecast Additional Information January $620,000 February 660,000 March 520,000 April forecast $510,000 Of the firm's sales, 30 percent are for cash and the remaining 70 percent are on credit. Of credit sales, 35 percent are paid in the month after sale and 65 percent are paid in the second month after the sale. Materials cost 35 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 45 percent of sales and is paid for in the month of sales. Selling and administrative expense is 10 percent of sales and is paid in the month of sales. Overhead expense is $20,000 in cash per month. Depreciation expense is $11,700 per month. Taxes of $9,700 will be paid in January, and dividends of $10,500 will be paid in March. Cash at the beginning of January is $114,000, and the minimum desired cash balance is $109,000.
Transcribed Image Text:Harry's Carryout Stores has eight locations. The firm wishes to expand by two more stores and needs a bank loan to do this. Mr. 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: Actual November $540,000 December 560,000 Forecast Additional Information January $620,000 February 660,000 March 520,000 April forecast $510,000 Of the firm's sales, 30 percent are for cash and the remaining 70 percent are on credit. Of credit sales, 35 percent are paid in the month after sale and 65 percent are paid in the second month after the sale. Materials cost 35 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 45 percent of sales and is paid for in the month of sales. Selling and administrative expense is 10 percent of sales and is paid in the month of sales. Overhead expense is $20,000 in cash per month. Depreciation expense is $11,700 per month. Taxes of $9,700 will be paid in January, and dividends of $10,500 will be paid in March. Cash at the beginning of January is $114,000, and the minimum desired cash balance is $109,000.
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