ACCT-1071 Case Study #2 - Vera's Magic Garden Ltd. Expenses & Financing 1. Principal payments of $200,000 plus 10% interest on the year-end loan balance is payable on January 01 each year. 2. Principal payments of $50,000 plus 6% interest on the year-end mortgage balance is payable on January 01 each year. 3. We have negotiated an increase of $450,000 to the existing loan to finance new greenhouses that will be built during the slow period of August - October. 4. The insurance policy is renewed on July 1st each year at a cost of $24,000. 5. Property taxes for 2023 will be $38,000 paid in January. 6. Salaries and wages are expected to increase to $240,000, paid as follows: i. 50% of salaries and wages expense is incurred during peak season April - July, paid evenly throughout each month. ii. iii. 30% of salaries and wages expense is incurred during March, August, September, and October, paid evenly throughout each month. 20% of salaries and wages expense is incurred during January, February, November, and December, paid evenly throughout each month. 7. All other expenses, other than depreciation and income tax, are expected to increase by 3%. 8. Selling expense, supplies expense and general/administrative expense follow the same pattern as salaries and wages expense. 9. All other expenses, other than income tax are incurred and paid evenly throughout the year. Income tax is paid in June based on the prior year's corporate tax return. 10. Dividends of $30,000 will be paid in December. 11. The corporation plans to buyout the shares of one of the original investors at a cost of $200,000 in June. 12. Vera's has access to a $500,000 line of credit to cover short-term cash needs at an annual interest rate of 6%. Excess cash is immediately used to repay the line of credit balance and interest charges are payable the following month on the prior month's ending balance. Accounting Fundamentals [ACCT-1070] Collaborative-Learning Case Study #2: Vera's Magic Garden Ltd. Marking Rubric Part I - Cash Budget (100 marks) Criteria Score All components are properly completed, including titles, with allocation by month from the source data and overall totals. It is logical, easy to follow, incorporates all relevant case facts and is free from abbreviations, slang, and spelling, grammar, and incorrect word usage errors. Work is completed using 12-point Times New Roman font with normal margins. APA referencing is used where required. A monthly sales budget is prepared and properly calculated. A monthly schedule of cash collections is properly prepared and calculated. /10 15 /16 A monthly cash budget is properly prepared and calculated with supporting schedules in labeled and referenced appendices. 163 A cover memo addressed to the client is prepared. The memo is professional in appearance and tone. The memo clearly and concisely explains the components and references key numbers and information. 16