Nadia Company, a merchandising company, prepares its master budget on a quarterly basis. The following data has been assembled to assist in preparation of the master budget for the second quarter.

a. As of March 31 (the end of the prior quarter), the company’s balance sheet showed the following account balances:

b. Sales for March total 10,000 units. Each month’s sales are expected to exceed the prior month’s results by 5%. The product selling price is $25.00 per unit.

c. Sales are 20% for the cash and 80% on credit. All payments on credit sales are collected in the month following the sale. The accounts receivable at March 31 are a result of March credit sales.

d. Company’s policy calls for a given month’s ending inventory to equal 80% of the next month’s expected unit sales. The March 31 inventory is 8,400 units, which complies with the policy. The purchase price is $15.

e. Monthly selling and administrative expenses are budgeted as follows: salaries and wages, $7500 per month; shipping 6% of sales; advertising, $6,000 per month; other expenses, 4% of sales. Depreciation including depreciation on new assets acquired during the quarter, will be $6,000 for the quarter. Sales representatives’ commissions are 12.5 % of sales and are paid in the month of the sales. The sales manager’s salary will be $3,500 in April and $4,000 per month thereafter.

f. Half a month’s inventory purchases are paid in the month of purchase and half in the following month.

g. Equipment purchases during the quarter will be as follows: April, $11,500; and May, $3,000.

h. Dividends totaling $3,500 will be declared and paid in June.

i. No cash payment for income taxes are to be made during the second calendar quarter. Income taxes will be assessed at 35% for the quarter.

1. Management wants to maintain a minimum cash balance of $8,000. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total balance of $20,000. The interest rate of these loans is 1% per month, and for simplicity, we will assume that the interest is not compounded. The company would as far as it is able, repay the loan plus accumulated interest at the end of the quarter.

Required: Using the above data, complete the following statements and schedules for the second quarter.

1. Sales budget

2. Purchases budget

3. Selling expense budget

4. General and administrative expense budget

5. Expected cash receipts from customers

6. Expected cash payments for purchases

7. Cash budget

8. Budgeted income statement, budgeted statement of retained earnings, and budgeted balance sheet

Simple Interest versus Compound Interest First City Bank pays 10% simple interest on its savings account balances; whereas, Second City Bank pays 10% interest compounded annually. If you made $6,000 deposit in each bank, how much more money would you earn from your Second City Bank account at the end of 10 years; and, what is the amount for First City Bank? What is the simple interest amount for First City Bank; What is the amount of compound interest for Second City Bank? So, which bank would earn the most interest/money

Suppose that Tomorrowland Speedway Incorporated is estimating cash flows for a new project.  The projections for the first year are as follows:

If the tax rate facing the firm is 34%, what is the project cash flow for the first year?

Question 11 options:

Dragnet Corporation has the following selected accounts at December 31, 2018 after posting adjusting entries:

Accounts Payable..... 56,400
Accumulated Depreciation - Equipment ... 24,000
Accounts Receivable ... 67,500
Bank Loan Payable, 3-month ... 165,000
GST Payable ... 14,000
Notes Payable, due 2025, 4% ... 85,000
Employee Benefits Expense ... 8,000
Interest Payable ... 6,600
Mortgage Payable ... 425,000
Salaries Payable ... 23,000

PART A: Prepare the current liability section of Dragnet Corporation's statement of financial position, assuming $25,000 of the mortgage is payable next year.
PART B: Comment on Dragnet's liquidity, assuming total current assets are $261,000. Support your comment with calculations

On January 1, 2020, Marigold Company purchased 12% bonds having a maturity value of $270,000, for $290,470.00. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Marigold Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.

1.Prepare the journal entry at the date of the bond purchase.

2.Prepare a bond amortization schedule.

3.Prepare the journal entry to record the interest revenue and the amortization at December 31, 2020.

4.Prepare the journal entry to record the interest revenue and the amortization at December 31, 2021.

Nash Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $4,600,000 on January 1, 2021. Nash expected to complete the building by December 31, 2021. Nash has the following debt obligations outstanding during the construction period.

1. Suppose you manage a bond portfolio with a current value of $150,000,000 and a duration of 7.32. You need to hedge the interest rate risk of this portfolio for some reason. Today's date is Monday, December 10th, 2018 so the settlement price for a treasury bond is the 11th. You decide to use the 10-year T-note futures to hege. The cheapest to deliver bond is the 3% coupon bond with maturity date September 30, 2025 which is currently selling for a yield of 2.766% (price of 101.4766 or 1.014766 per 1$ of face value)

A. What is the duration of the CTD bond?

B. How many futures contracts do you enter into?

C. Do you go long or short these contracts?

At January 1, 2018, Café Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. The lease agreement specifies annual payments of $26,000 beginning January 1, 2018, the beginning of the lease, and at each December 31 thereafter through 2025. The equipment was acquired recently by Crescent at a cost of $189,000 (its fair value) and was expected to have a useful life of 13 years with no salvage value at the end of its life. (Because the lease term is only 9 years, the asset does have an expected residual value at the end of the lease term of $27,160.) Crescent seeks a 8% return on its lease investments. By this arrangement, the lease is deemed to be an operating lease.

Suppose you manage a bond portfolio with a current value of $150,000,000 and a duration of 7.32. You need to hedge the interest rate risk of this portfolio for some reason. Today's date is Monday, December 10th, 2018 so the settlement price for a treasury bond is the 11th. You decide to use the 10-year T-note futures to hege. The cheapest to deliver bond is the 3% coupon bond with maturity date September 30, 2025 which is currently selling for a yield of 2.766% (price of 101.4766 or 1.014766 per 1$ of face value)

What is the duration of the CTD bond?

How many futures contracts do you enter into?

Do you go long or short these contracts?

Instructions Prepare a classified balance sheet in good form as of December 31, 2020. (Not all items listed are needed to complete this problem.) Upload your completed template when you are finished.