Problem Set 1
Juan's Taco Company is a well established taco restaurant in five college towns. Juan wants to expand into the Austin and College Station markets. These 2 cities are the location of Texas A&M and University of Texas colleges. Juan has applied for a loan to open the 2 new stores and Mr. Bryan, the banker, has agreed to finance Juan but needs more information about Juan's company first. Mr. Bryan wants Juan to compile a three month financial plan form January through March.
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.
Problem 20 Chapter 4.
Monthly Cash Receipt
January February March April
Sales $190,000.00 $210,000.00 $230,000.00 $230,000
Collection
30% Cash $57,000.00 $63,000.00 $69,000.00 $69,000
70% Credit $133,000.00 $147,000.00 $161,000.00 $161,000
40% month after sale $39,200.00 $53,200.00 $58,800.00 $64,400
60% 2 months after sale $50,400.00 $58,800.00 $79,800.00 $88,200
Total Cash Receipts $146,600.00 $175,000.00 $207,600.00 $221,600
Monthly Cash Payments
January February March April
Labor-50% of sales $95,000 $105,000 $115,000 $115,000
Materials 20% of sales $38,000 $42,000 $46,000 $46,000
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