You have been engaged as a consultant to design a master budget model and then to assist Helping Hand Corp. in making some management decisions based on that master budget.

Helping Hand is a small, rapidly growing wholesaler of consumer electronic products. The company’s main product lines are small kitchen appliances and power tools. The marketing manager has recently completed a sales forecast. She believes the company’s sales will increase by 1 percent each month over the previous month’s sales from December 2018 through March 2019. Then sales are expected to remain constant for several months. Helping Hand’s projected balance sheet as of December 31, 2018 is as follows: Cash $ 60,000 Accounts receivable 172,530 Marketable securities 10,000 Inventory 39,784 Buildings and equipment (net of accumulated depreciation) 600,000 Total assets $ 882,314 Accounts payable $ 111,940 Sales commissions payable 4,040 Bond interest payable 8,000 Property taxes payable 0 Bonds payable (4%; due in 2022) 600,000 Common stock 100,000 Retained earnings 58,334 Total liabilities and stockholders' equity $ 882,314

The following information has been accumulated to assist with preparing the master budget for the first quarter of 2019:

1) Projected sales for November 2018 are $200,000. Credit sales are typically 90% of total sales. Helping Hand’s credit experience indicates that 13% of credit sales are collected during the month of sale, 75% in the month following the sale, and 10% in the second month following the sale. Experience shows the remaining credit sales are uncollectible.

2) Helping Hand’s cost of goods sold generally runs at 65% of sales. Inventory is purchased on account and 15% of each month’s purchases are paid during the month of purchase. The remainder is paid during the following month. In order to have adequate stocks of inventory on hand, the company attempts to have inventory on hand at the end of each month equal to 30% of the next month’s projected cost of goods sold.

3) The controller has estimated that Helping Hand’s other monthly expenses will be as follows: Sales salaries $ 35,000 Advertising and promotion 5,000 Administrative salaries 12,000 Depreciation 7,500 Interest on bonds 2,000 Property taxes 1,000 In addition, sales commissions run at the rate of 2.0 percent of sales. Sales commissions are paid in the month following the month of sale.

4) The company president has indicated that the company should invest $225,000 in an automated inventory-handling system to control the movement of inventory in the company’s warehouse just after the new year begins. The president would like to purchase the equipment primarily from the company’s cash and marketable securities. However, the president believes the company should have a minimum cash balance of $30,000 at the end of each month. If necessary, the remainder of the equipment purchase may be financed using short-term credit from a local bank. The minimum lending period for such a loan is three months (this means the earliest the loan can be paid off is March 31st). The current short-term interest rates are 6 percent per year and are expected to remain at this rate through the time the equipment is purchased. If a loan is necessary, the entire amount required for the quarter must be borrowed on January 1st and must be in a $1,000 increment. The loan is a short term loan and the president has decided it should be paid off at the end of the first quarter if possible. If the entire amount cannot be repaid at March 31st, any partial payment will be paid at the end of the first quarter and in a $1,000 increment.

5) Helping Hand’s board of directors has indicated an intention to declare and pay dividends of $150,000 on the last day of each quarter.

6) The interest on any short-term borrowing will be paid when the loan is repaid. Interest on Helping Hand’s bonds is paid semiannually on February 28 and August 31 for the preceding sixmonth period.

7) Property taxes are paid quarterly on March 31, June 30, September 30, and December 31 for the preceding three-month period.

Required: Build a model to forecast Helping Hand Corp’s cash balance at March 31, 2019. Your model must contain the following master budget schedules. Round all amounts to the nearest dollar. Your model should allow you to change any of the assumptions provided above and easily recalculate the ending cash balance at March 31, 2019. The assumptions may be on a separate worksheet but all of the schedules below must be on one worksheet.

1) Sales budget: 2018 2019 November December January February March 1st Quarter Total sales Cash sales Sales on account

2) Cash receipts budget: 2019 January February March 1st Quarter Cash sales Cash collections from credit sales made during current month Cash collections from credit sales made during preceding month Cash collections from credit sales made during 2nd preceding month Total cash receipts

3) Purchases budget: 2018 2019 December January February March 1st Quarter Budgeted cost of goods sold Add: Desired ending inventory Total goods needed Less: Expected beginning inventory Purchases

4) Cash disbursements budget: 2019 January February March 1st Quarter Inventory purchases: Cash payments for purchases during the current month Cash payments for purchases during the preceding month Total cash payments for inventory purchases Other expenses: Sales salaries Advertising and promotion Administrative salaries Interest on bonds Property taxes Sales commissions Total cash payments for other expenses Total cash disbursements

5) Summary cash budget: 2019 January February March 1st Quarter Cash receipts (sch 2) Less: Cash disbursements (sch 4) Change in cash balance during period due to operations Sale of marketable securities (1/2/19) Proceeds from bank loan (1/2/19) Purchase of equipment Repayment of bank loan (3/31/19) Interest on bank loan Payment of dividends Change in cash balance during the month Beginning cash balance Ending cash balance

6) Prepare a memo to the president of Helping Hands Corp with at least two recommendations on how the company can ensure it completes the first quarter of 2019 with the minimum required cash balance. You should provide a plan to support your recommendation. For example, if you recommend an increase in sales, how can this be attained. Be specific. You should provide specific financial information for your recommendations utilizing your model (include a model for each of your recommendations). For example, if the company does X, the change in ending cash will be Y. Your model will become the property of Helping Hands Corp. and should be easy to use. Not buying the equipment is NOT an option. All assumptions are based on the purchase of the new equipment.

During the first quarter of 2015, Toronto Dominion Bank (TD) stock cost $45 per share, was expected to yield 4% per year in dividends, and had a risk index of 3.0 per share, while CNA Financial Corp. (CNA) stock cost $40 per share, was expected to yield 2.5% per year in dividends, and had a risk index of 2.0 per share.† You have up to $25,000 to invest in these stocks, and would like to earn at least $796 in dividends over the course of a year. (Assume the dividends to be unchanged for the year.) How many shares (to the nearest tenth of a unit) of each stock should you purchase to meet your requirements and minimize the total risk index for your portfolio?

Toronto Dominion Bank sharesCNA Financial Corp. shares

What is the minimum total risk index? (Round your answer to two decimal places.)

During the first quarter of 2015, Toronto Dominion Bank (TD) stock cost $45 per share, was expected to yield 4% per year in dividends, and had a risk index of 3.0 per share, while CNA Financial Corp. (CNA) stock cost $40 per share, was expected to yield 2.5% per year in dividends, and had a risk index of 2.0 per share.† You have up to $25,000 to invest in these stocks, and would like to earn at least $778 in dividends over the course of a year. (Assume the dividends to be unchanged for the year.) How many shares (to the nearest tenth of a unit) of each stock should you purchase to meet your requirements and minimize the total risk index for your portfolio?

Toronto Dominion Bank  shares:

CNA Financial Corp.  shares:

What is the minimum total risk index? (Round your answer to two decimal places.)

During the first quarter of 2015, Toronto Dominion Bank (TD) stock cost $45 per share, was expected to yield 4% per year in dividends, and had a risk index of 3.0 per share, while CNA Financial Corp. (CNA) stock cost $40 per share, was expected to yield 2.5% per year in dividends, and had a risk index of 2.0 per share.† You have up to $25,000 to invest in these stocks, and would like to earn at least $796 in dividends over the course of a year. (Assume the dividends to be unchanged for the year.) How many shares (to the nearest tenth of a unit) of each stock should you purchase to meet your requirements and minimize the total risk index for your portfolio?

Toronto Dominion Bank -

CNA Financial Corp -

Question 1
Fantastic Fashions has just completed its first quarter of operations. Below are transactions that have not yet been recorded. Prepare the journal entries listed below.
  
   Jan 1    Pre-tax cash sales amounted to $75,000. HST is collected on all sales at a rate of 13%.
   Jan 15    Signed a three month note for $12,000 to extend amounts owing on account to Trendy Taste Inc. Interest is 6% annually and due at maturity.
   Mar 1    Received the annual property tax bill for $7,500 payable on June 1.
   Apr 1    Paid salaries of $10,000; of this amount $495 is CPP, $178 is EI and $3,465 is for income taxes (record the employer portion as well).
   Apr 15    Paid the note due.
   Apr 29    A customer sued Fantastic Fashions for $200,000. Legal counsel has advised that it is unlikely damages will be awarded.
   Jun 1    Paid the property taxes bill in full.

company ABC released its quarterly report, showing the sales in the first quarter had tumbled 30% as pandemic hit. However, the stock price for company ABC went up by 3% right after the report was released. Does this mean a failure for the Market Efficient Theory?

EastGate Physical Therapy Inc. is planning its cash payments for operations for the first quarter (January–March). The Accrued Expenses Payable balance on January 1 is $32,000. The budgeted expenses for the next three months are as follows:

Other operating expenses include $4,000 of monthly depreciation expense and $900 of monthly insurance expense that was prepaid for the year on May 1 of the previous year. Of the remaining expenses, 70% are paid in the month in which they are incurred, with the remainder paid in the following month. The Accrued Expenses Payable balance on January 1 relates to the expenses incurred in December.

Prepare a schedule of cash payments for operations for January, February, and March. Enter all amounts as positive numbers.