Assume that the B Bank was organized on January 1 last year, issuing $2,000,000 of nopar common stock B immediately began to accept deposits from the public and had accumulated $3,000,000 in deposits by the end of the year. On July 1 of that year B made a loan of $500,000 to the Y Manufacturing Corporation, receiving a one-year note receivable with interest of eight percent payable at maturity (on the following June 30) On August 1, B invested $1,000,000 in six percent, twenty-year, $1,000 government bonds. The annual interest of $60 per bond was payable in quarterly installments, beginning on October 31 of that year, when B collected $15,000 B also invested $2,800,000 in listed marketable securities, on which B received $250,000 in cash dividends during the year. B's total expenses of $180,000 for the year were for interest on its deposits. $40,000 of the $180,000 represented accrued interest owed to depositors, the remaining $140,000 was paid in cash during the year REQUIREMENTS: (maximum page limit is 7 double-spaced type-written pages) (1) Prior to the accountingfor the bonus payment, prepare a balance sheet and income statement for the first calendar year of business for Bank B in accordance with GAAP. ASsume a 25% income tax rate. (2) To how much additional compensation is the president of Bank B entitled under a contract which provides for a bonus of "ten percent of annual net profits, computed before deduction of the bonus and taxes"? Show your calculation, including identifying the line item in the financial statements from which each number was taken, if any. (3) If you represent the bank in negotiating an employment contract with the next bank president, (a) list ten issues you have with the contractual language, (b) indicate what new contractual language you would recommend, and (c) provide a reason for your recommendation. Assume that the bank has greater control over the accounting than does the bank president (4) If you represent the bank president in negotiating an employment contract with Bank B, (a) list five different issues than those listed in (3) that you have with the contractual language, (b) indicate what new contractual language you would recommend and (c) provide a reason for your recommendation. In responding to (4)(a), issues are different from (3) if they are incremental to the ones identified in (3) or result in a different recommendation In providing your responses to requirements 3(a, b and c) and 4 (a, b and c), use the following format in providing your answers for each issue identified: Issue [fill in #]. Recommended New Contractual Language_ (Continued on next page) Reason for your Recommendation_ Assume that the B Bank was organized on January 1 last year, issuing $2,000,000 of nopar common stock B immediately began to accept deposits from the public and had accumulated $3,000,000 in deposits by the end of the year. On July 1 of that year B made a loan of $500,000 to the Y Manufacturing Corporation, receiving a one-year note receivable with interest of eight percent payable at maturity (on the following June 30) On August 1, B invested $1,000,000 in six percent, twenty-year, $1,000 government bonds. The annual interest of $60 per bond was payable in quarterly installments, beginning on October 31 of that year, when B collected $15,000 B also invested $2,800,000 in listed marketable securities, on which B received $250,000 in cash dividends during the year. B's total expenses of $180,000 for the year were for interest on its deposits. $40,000 of the $180,000 represented accrued interest owed to depositors, the remaining $140,000 was paid in cash during the year REQUIREMENTS: (maximum page limit is 7 double-spaced type-written pages) (1) Prior to the accountingfor the bonus payment, prepare a balance sheet and income statement for the first calendar year of business for Bank B in accordance with GAAP. ASsume a 25% income tax rate. (2) To how much additional compensation is the president of Bank B entitled under a contract which provides for a bonus of "ten percent of annual net profits, computed before deduction of the bonus and taxes"? Show your calculation, including identifying the line item in the financial statements from which each number was taken, if any. (3) If you represent the bank in negotiating an employment contract with the next bank president, (a) list ten issues you have with the contractual language, (b) indicate what new contractual language you would recommend, and (c) provide a reason for your recommendation. Assume that the bank has greater control over the accounting than does the bank president (4) If you represent the bank president in negotiating an employment contract with Bank B, (a) list five different issues than those listed in (3) that you have with the contractual language, (b) indicate what new contractual language you would recommend and (c) provide a reason for your recommendation. In responding to (4)(a), issues are different from (3) if they are incremental to the ones identified in (3) or result in a different recommendation In providing your responses to requirements 3(a, b and c) and 4 (a, b and c), use the following format in providing your answers for each issue identified: Issue [fill in #]. Recommended New Contractual Language_ (Continued on next page) Reason for your Recommendation_