Financial Management

Homework Assignment #$9$

Second Chance Bakery, Part $1$

$$

Second Chance Bakery is a not$-$for$-$profit organization that employs formerly incarcerated individuals. In addition to its retail sales, the Bakery has a contract with the city government to supply bread and desserts to the city$$s senior centers. The organization ended FY $2024($on December $31,2024)$ with the following account balances $($in alphabetical order$)$:

$$

Accounts Payable

$46,500$

Cash

$151,000$

Contracts Receivable, net

$81,000$

Equipment, net

$213,000$

Inventory

$2,500$

Investments$*$

$12,000$

Net Assets

$225,500$

Notes Payable

$150,000$

Pledges Receivable, net

$13,000$

Wages Payable

$50,500$

$*$ Investments consist solely of stocks and bonds.

Prepare a transactions worksheet, balance sheet, and activity statement for FY $2025$ based on the following information. $($Don$$t forget to link your spreadsheets, as you have done the past two assignments!$)$ Note: there is no template for this assignment.

Second Chance Bakery experienced the following financial events during FY $2025$:

a$)$ On January $1,2025,$ Second Chance Bakery borrowed $$75,000$ from a bank.

b$)$ On July $1,2025,$ the Bakery used the $$75,000$ loan to buy new kitchen equipment. The equipment has an estimated useful life of $10$ years and no salvage value. Equipment purchased in previous fiscal years depreciated by $$26,000$ in FY $2025.$

c$)$ The Bakery earned and received $$725,000$ in retail sales revenue.

d$)$ The Bakery also earned city contract revenue of $$1,110,000$ in FY $2025$ and $972,000$ in FY $2024,$ spread evenly throughout the year. City contract revenue is received with a one$-$month lag.

e$)$ The Bakery earned $$142,000$ in donations in FY $2025,$ of which it collected $$118,000$ in cash. The organization also collected $$13,000$ in donations earned in the previous fiscal year and anticipates collecting any pledges that were outstanding at the end of FY $2024$ in FY $2025.$

f$)$ On January $1,2025,$ the Bakery purchased $$4,000$ in stocks. The organization$$s investment portfolio was valued at $$21,500$ at the end of FY $2025,$ and the organization did not buy or sell any investments. $($Hint: you must $$back out$$ the unrealized gain or loss on investments.$)$

g$)$ The Bakery$$s employees earned a total of $$1,430,000$ in wages during FY $2025,$ up from $$1,313,000$ in FY $2024.$ The Bakery pays its employees weekly with a two$-$week lag.

h$)$ The Bakery ordered $$24,000$ in supplies each month. Supplies are used in the same month in which they are ordered, but are paid for with a two$-$month lag. In FY $2024,$ the Bakery ordered $$23,250$ in supplies each month.

i$)$ Occupancy costs $($rent and utilities$)$ totaled $$19,500$ per month and were paid timely $($i$.$e$.,$ without a lag$).$

j$)$ The new bank loan, like the preexisting loan the Bakery had at the start of FY $2025,$ carries an annual interest rate of $5\mathrm{.}5\%.$ The Bakery made the required interest payment on both loans on December $31,2025.$

k$)$ On December $31,2025,$ as required, the Bakery also repaid $$50,000$ in principal to the bank. Another $$50,000$ of principal is due in FY $2026.$