26) Mary's Dairy has the following information available for the preparation of the cash budget for the second quarter:
Cash balance, March 31$ 15,000
Sales for April; all cash220,000
Sales for May; all cash330,000
Sales for June; all cash440,000
Cost of Goods Sold is 80% of Sales; all cash
Operating expenses is 8% of Sales; all cash
Interest expense is paid in June40,000
Income tax rate is 30%
The minimum cash balance for any month is $10,000.
Prepare a cash budget for each month in the second quarter for this company. No additional equipment will be purchased this quarter.
27) Carrie Heffernan, Inc., has the following assets at the end of the year:
Petty cash fund
|
$1,000
|
Cash in checking account
|
13,000
|
Time deposits
|
12,000
|
Accounts Receivable
|
40,000
|
Short-Term Investments
|
22,000
|
Investments in high-grade government securities, maturing in 90 days
|
14,000
|
Cash restricted for collateral on short-term loan
|
100,000
|
Prepaid Rent
|
20,000
|
Supplies
|
12,000
|
Prepare the current assets section of the balance sheet for this company.
28) Jerry's Company is looking at various financing agreements. New Credit Union has agreed to loan the company $500,000 at 8% interest. Happy Bank has agreed to loan the company $500,000 at an interest rate of 6%. This is the lowest interest rate the company has been offered. However, as a condition to the loan, the company must maintain a compensating balance amount equal to 20% of the loan.
Required:
1. Determine the company's actual effective interest rate on the bank loan.
2. Which loan has the lowest interest cost?