Appendix A: Notes from Client Meeting

The following information was provided by the owner of Vera's Magic Garden Ltd. detailing expected sales, collections, purchases, expenditures, payments and financing for the fiscal year, January 01 - December 31. 2023.

Sales

Sales are expected to increase by 5% over 2022 and historically have been earned as follows:

January - March, October & November 0%

April 15%

May. 30%

June. 25%

July. 10%

August & September (each month). 5%

December. 10%

Total sales. 100%

Most sales are cash (30%) and credit card (60%); however, we do some corporate sales (10%) that

are billed and collected the following month. Credit card sales are deposited directly to our bank account the next business day less a 4% transaction fee. The only exception to this pattern is December with sales of holiday wreathes and arrangements that are mainly corporate (80%) with the balance from cash sales.

Purchases & Cost of Goods Sold Purchases are approximately 35% of total sales. Orders are made in February and a 20% deposit is payable in March. Approximately 60% of orders arrive during April and the balance arrive in early May with the balance owing paid 60 days following receipt. An additional purchase of $35,000 is planned

for November for the holiday season and is payable the following January.

Although purchases are approximately 35% of sales, cost of goods sold is approximately 38% of

sales due to plant loss and end-of-season scrap. Annuals not sold during the season are scrapped as the cost of overwintering cannot be recovered; therefore, inventory consists of pots, soil, fertilizer, trees, shrubs, and perennials that are overwintered for sale next year.

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. D 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: 1. 50% of salaries and wages expense is incurred during peak season April - July, paid evenly throughout each month. . 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. III. 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 retum. 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. 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. D 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: 1. 50% of salaries and wages expense is incurred during peak season April - July, paid evenly throughout each month. . 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. III. 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 retum. 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