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Accounting

1. Ann obtains a 30 year Interest Only Fixed Rate Mortgage with monthly payments for $4,500,000 at 4.38%. What will Ann's monthly payments be?

2.Comprehensive Master Budget Allenby's CEO decided to apply the new budget approach in preparing comprehensive budgets for the upcoming second quarter. The following information is assembled from accounting and other business areas. The company sells many styles of earrings, but all are sold for the same price, i.e. $12 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings): January (actual) 22 000 June (budget) 55 000 February (actual) 28 000 July (budget) 32 000 March (actual) 42 000 August (budget) 30 000 April (actual) 66 000 September (budget) 28 000 May (budget) 100 000 The concentration of sales before and during May is due to Mother's Day. Sufficient inventory should be on hand at the end of each month to supply 45% of the earrings sold in the following month. Suppliers are paid $5 for a pair of earrings. One-half of a month's purchases is paid for in the month of purchase, and the other half is paid for in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 20% of a month's sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible. Monthly operating expenses for the company are given below. Variable: Sales commissions 5% of sales Fixed: Advertising $210 000 Rent 22 000 Salaries 110 000 Utilities 8 000 Insurance 5 000 Depreciation 15 000 Insurance is paid on an annual basis, in November of each year. The company plans to purchase $20 000 in new equipment during May and $42 000 in new equipment during June, and both will be for cash. The company declares dividends of $15 000 each quarter, payable in the first month of the following quarter.
A listing of the company's ledger accounts as of March 31 is given below. Assets Cash $70 000 Accounts receivable 436 800 ($33 600 February sales, $403 200 March sales) Inventory 148 500 Prepaid insurance 25 200 Property and equipment (net) 903 500 Total assets $1 584 000 Liabilities and Stockholders' Equity Accounts payable Dividends payable Common stock Retained earnings Total liabilities and stockholders' equity $125 000 15 000 850 000 594 000 $1 584 000 The company maintains a minimum cash balance of $60 000. All borrowing is done at the beginning of a month, and any repayments are made at the end of a month. The company has an agreement with a bank that allows the company to borrow in increments of $1 000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1 000), while still retaining at least $60 000 in cash. Required: You are required to provide all the supporting schedules that are needed to compile the budgeted balance sheet for the three month period ending June 30 as follows:
5. A cash budget. Show the budget by month and in total. Determine any borrowing that would be needed to maintain the minimum cash balance of $60 000. (12 marks) 6. A budgeted income statement for the three-month period ending 30 June. Use the contribution approach. (8 marks) 7. A budgeted balance sheet as at June 30. (12 marks)
1. A sales budget, by month and in total (6 marks) 2. A schedule of expected cash collections from sales, by month and in total (8 marks) 3. A merchandise purchases budget in units and in dollars. Show the budget by month and in total. (8 marks) 4. A schedule of expected cash disbursements for merchandise purchases, by month and in total (6 marks)

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