3 GRAPHS

Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparing the master budget for the first quarter a. As of December 31 (the end of the prior quarter), the company's general ledger showed the following account balances: Cash Accounts receivable Inventory Buildings and equipment (net) Accounts payable Common stock Retained earnings 48,888 224, eee 60,000 370, eee $ 93, eee See, eee 109, eee 782, eee $ 782, eee $ b. Actual sales for December and budgeted sales for the next four months are as follows: December(actual) January February March $ 280,00 $ 480,000 $ 600, een $ 300,000 December (actual) January February March April $ 280,000 $ 480, eee $ 680,000 $ 300,000 $ 200,000 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. (In other words, cost of goods sold is 60% of sales.) e Monthly expenses are budgeted as follows: salaries and wages, $27.000 per month advertising, $70,000 per month shipping, 5% of sales, other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $42,000 for the quarter. 1. Each month's ending inventory should equal 25% of the following month's cost of goods sold g. One-half of a month's inventory purchases is paid for in the month of purchase, the other half is paid in the following month h. During February, the company will purchase a new copy machine for $1700 cash During March other equipment will be purchased for cash at a cost of $84,500 During January, the company will declare and pay $45,000 in cash dividends. J. Management wants to maintain a minimum cash balance of $30,000. 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. The interest rate on these loans is 1% per month and 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, Required: Using the data above, complete the following statements and schedules for the first quarter: Complete the cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Hillyard Company Cash Budget January February March Quarter Beginning cash balance S 48,000 Add collections from customers 304,000 Total cash available 352,000 0 0 0 Less cash disbursements: Inventory purchases 228,000 Selling and administrative expenses 129.000 Equipment purchases Cash dividends 45,000 Total cash disbursements 402,000 0 0 Excess (deficiency) of cash (50,000) 0 0 Financing: Borrowings Repayments Interest Total financing 0 0 0 0 Ending cash balance (50,000) $ 0 $ 0 0 0 0 Income Statement For the Quarter Ended March 31 Cost of goods sold: 0 0 0 Selling and administrative expenses: 0 0 $ 0 March 31 Assets Current assets: Total current assets 0 Total assets $ 0 Liabilities and Stockholders' Equity Current liabilities: Stockholders' equity: 0