2-a. Inventory purchases budget. \begin{tabular}{|l|l|l|l|} \hline HILLYRD COMPANY \\ \hline Total cash available & Cash Budget \\ \hline Deduct Disbursements & & & \\ \hline \end{tabular} 3. Schedule of cash disbursements for expenses. 5. Prepare an income statement for the quarter ending March 31. HILLYARD COMPANY Balance Sheet As of March 31 Assets d. I he company's gross margin is 40% of sales. e. Monthly expenses are budgeted as follows: salaries and wages, $25,000 per month; advertising, $70,000 per month; shippir of sales; depreciation, $12,000 per month; other expenses, 3% of sales. f. At the end of each month, inventory is to be on hand equal to 25% of the following month's sales needs, stated at cost. 9. One-half of a month's inventory purchases are paid for in the month of purchase; the other half are paid for in the following m h. During February, the company will purchase a new copy machine for $2,200 cash. During March, other equipment will be purchased for cash at a cost of $81,000. i. During January, the company will declare and pay $47,000 in cash dividends. j. The company must maintain a minimum cash balance of $30,000. An open line of credit is avallable at a local bank for any borrowing that may be needed during the quarter. All borrowing is done at the beginning of a month, and all repayments are at the end of a month. Borrowings and repayments of principal must be in multiples of $1,000. Interest is paid only at the time payment of principal. The annual interest rate is 12%. (Figure interest on whole months, e.g., 1/12, 2/12.) Required: Using the preceding data, complete the following statements and schedules for the first quarter: 1. Schedule of expected cash collections. Hillyard Company. an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparation of the master budget for the first quarter: a. As of December 31 (the end of the prior quartet), the comparry's general ledger showed the following account balances: b. Actual sales for December and budgeted sales for the next four months are as follows: c. Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at December 31 are a result of December credit sales. d. The company's gross margin is 40% of sales. e. Monthly expenses are budgeted as follows: solaries and wages, $25,000 per monte, advertising, $70,000 per month, shipping. 586 4. Cash budget. (Roundup "Borrowing" and "Repoyments" answers to the nearest whole dollor omount. Any "Rapayments" and "Interest" should be indicated by a minus sign.)
