8) 6 Saved 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 $ 40,000 200,000 57,750 350,000 $ 85,125 500,000 62,625 $ 647,750 $647,750 b. Actual sales for December and budgeted sales for the next four months are as follows: December (actual) January February March April $250,000 $385,000 $582,000 $296,000 $193,000 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, $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 Prev 1 of 1 Next Help