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 64,989 219, 280 61,350 374, $ 92,325 see, e 126,225 718,550 $ 718,550 $ b. Actual sales for December and budgeted sales for the next four months are as follows: December (actual) January February March April $ 274,000 $ 499,000 $ 606,000 $ 321,989 $ 217.eee or 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, $39.000 per month: advertising. $57,000 per month; shipping. 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $45.940 for the quarter. f. 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 $3,400 cash. During March, other equipment will be purchased for cash at a cost of $82,000. i. 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 Schedule of expected cash collections: Schedule of Expected Cash Collections January February March Cash sales $ 81,800 $ 121,200 $ 64,200 Credit sales 219,200 327,200 484,800 Total collections $ 301,000 $ 448,400 $ 549,000 Quarter $ 267,200 1,031,200 1.298.400 Required 1 Required 2A > 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 schedule of expected cash disbursements for merchandise purchases. Schedule of Expected Cash Disbursements for Merchandise Purchases January February March Quarter December purchases $ 92,325 $ 0 $ 0 $ 92,325 January purchases L 137,475 137,475 0 274,950 February purchases 0 160,425 160,425 320,850 March purchases 0 0 88,500 88,500 Total cash disbursements for purchases $ 229,800 $ 297,900 $ 248,925 $ 776,625 Required 1 Required 2A Required 2B Required 3 Required 4 Required 5 Complete the cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.) March Quarter Hillyard Company Cash Budget January February $ 64,000 301,000 448,400 365,000 448,400 549,000 549,000 1,298,400 1,298,400 297,900 248,925 776,625 229,800 128,720 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 45,000| 403,520 (38,520) 297,900 150,500 248,925 300,075 776,625 521,775 Interest 01 Total financing Ending cash balance $ (38,520) $ 150,500 $ 300,075 S 521,775 Prepare an absorption costing income statement for the quarter ending March 31. Hillyard Company Income Statement For the Quarter Ended March 31 Sales Cost of goods sold: Beginning inventory 61,350 Purchases 772,800 Goods available for sale 834,150 Ending inventory 171,600 Gross margin Selling and administrative expenses: Salaries and wages Advertising Shipping Depreciation 662,550 (662,550) (662,550) Other expenses Net operating income Interest expense Net income S (662,550) Hillyard Company Balance Sheet March 31 Assets Current assets: Cash Accounts receivable Inventory Total current assets Buildings and equipment, net Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Stockholders' equity: Common stock Retained earnings Total liabilities and stockholders' equity