20. 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:

Additional
Actual Forecast 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, prepare a schedule of monthly cash receipts, monthly cash payments, and a complete monthly cash budget with borrowings and repayments.

Juan’s Taco Company Cash Receipts Schedule

November
December
January
February
March
April
Sales
$120,000
$140,000
$190,000
$210,000
$230,000
$230,000
Credit sales (70%)
84,000
98,000
133,000
147,000
161,000
161,000
Cash sales (30%)
36,000
42,000
57,000
63,000
69,000
69,000
Collections
40% (month after credit sales)

33,600

39,200

53,200

58,800

64,400
Collections
60% (two months after credit sales)

50,400

58,800

79,800

88,200
Total