5 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, $15,000 per month advertising $55,000 per month: shipping, 5% of sales, other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $42,100 for the quarter. f. Each month's ending inventory should equal 25% of the following month's cost of goods sold. 9. 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 $1,000 cash. During March, other equipment will be purchased for cash at a cost of $70,000. 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2A Required 2B Required 3 Required 4 Required 5 Complete the merchandise purchases budget: Merchandise Purchases Budget January February $ 349,200 Budgeted cost of goods sold $231,000 Add desired ending inventory 87,3001 Total needs 318,300 Less beginning inventory 57,750 Required purchases $ 260,550 $385,000 sales Complete the cash budget. (cash deficiency, repayments and interest should be indicated by a minus sign.) March Quarter Hillyard Company Cash Budget January February $ 40,000 $ 30,800 277,000 424,400 317,000 455,200 $ 54,215 524,800 579,015 $ 40,000 1,226,200 1,266,200 234,450 215,400 100,800 283,425 116,560 1,000 93,680 70,000 Beginning cash balance Add collections from customers Total cash available Less cash disbursements: Inventory purchases Selling and administrative expenses Equipment purchases Cash dividends Total cash disbursements Excess (deficiency) of cash Financing Borrowings Repayments Interest Total financing Ending cash balance 733,275 311,040 71,000 45,000 1,160,315 105,885 45,000 361,200 (44,200) 400,985 54215 398,130 180,885 75,000 (75,000) (2,250) (77.250) 103,635 75,000 (75,000) (2.250) (2,250) 103,635 75,000 30,800 $ 54,215 s Hillyard Company Income Statement For the Quarter Ended March 31 Sales $ 1,263,000 Cost of goods sold: Beginning inventory Purchases 57,750 729,450 X 787,200 29,400 757,800 505,200 Goods available for sale Ending inventory Gross margin Selling and administrative expenses: Salaries and wages Advertising Shipping Other expenses Depreciation 45,000 165,000 63,150 37,890 42,100 Net operating income 353,140 152,060 2,250 149,810 Interest expense Net income $ Balance Sheet March 31 Assets Current assets: Cash $ Accounts receivable Inventory 103,635 236,800 29,400 Total current assets 369,835 Buildings and equipment, net 378.900 748.735 Total assets $ Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ $ 81,300 Stockholders' equity: Common stock $ 500,000 167,435 667,435 Retained earnings Total liabilities and stockholders' equity $ 748.735