Project 2 Case 1 Nordic Company is a merchandising company that distributes hiking backpacks to retailers. Nordic prepares its master budget on a quarterly basis. The following data have 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 Cash Accounts receivable Inventory Buildings and $ 9,700 52,800 3,140 219,700 equipment (net) Accounts payable Capital stock Retained earnings $ 20,430 190,000 84,910 $295,340 $295,340 b. Actual sales for March and budgeted sales for April-July are as follows: March (actual) April May June July 1320 backpacks 1460 backpacks 1720 backpacks 1860 backpacks 1040 backpacks C. All sales are on account. Typically, 20% of sales are collected in the month of the sale, and 80% are collected in the month following the sale. d. Nordic sells each backpack for $50, and the cost of each backpack to Nordic is $30 e. Monthly selling and administrative expenses are budgeted as follows: salaries and wages, $8,000 per month; shipping, $2.50 per backpack; advertising, $6,400 per month; other expenses, $1 per backpack. Depreciation, including depreciation on new assets acquired during the quarter, will be $6,700 for the quarter f. Each month's ending inventory should equal 30% of the following month's sales in units. g Half of a month's inventory purchases are paid for in the month of purchase and half in the following month h. Cash equipment purchases during the quarter will be as follows: Apri, $11,800, and May, $5,600. i. Dividends totaling $3,700 will be declared and paid in June. j. 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 loan balance of $20,000. The interest rate on these loans is 1% per month for simplicity, we will assume that 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. , and