ANALYSIS REQUIREMENT: You have just been hired as a new management trainee by the company. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash.

Since you are well trained in budgeting, you have decided to prepare comprehensive budgets for the upcoming quarter. You do not want to give management the set of comprehensive budgets without making constructive suggestions for steps that the company could take to improve expected performance. Prepare a one-page report to management:

(1) outlining your suggestions for the company based on the results of the budget you prepared

AND

(2) explaining the general benefits that can be gained from an integrated budgeting system.

Answer to Part 1. Rate Schedule of Expected Cash Collections Cash Sales Collection from Credit Sales Total Cash Collections Janua 81600 218400 300000 Februa 121000 326400 447400 March 64000 484000 548000 Quarter 266600 1028800 1295400 Answer to Part 2. Merchandise Purchases Budget Budgeted Cost of goods sold Add: Desired Ending Inventory Total Needs Less: Beginning Inventory Required Purcha ses Janua 244800 90750 335550 61200 274350 Februa 363000 48000 411000 90750 320250 March 192000 32400 224400 48000 176400 Quarter 799800 32400 832200 61200 771000 Schedule of Expected Cash Disbursements Merchandise Purchases January February 92025 137175 March December Purchases January Purchases February Purchases March Purchases Total Disbursements Quarter 92025 274350 320250 88200 774825 137175 160125 160125 88200 248325 229200 297300 Answer to Part 3 Cash Disbursements for Expenses Februa Salaries and Wages Advertising Shipping Other Expenses Total Cash Disbursements for Expenses Janua 38000 58000 20400 12240 128640 38000 58000 30250 18150 144400 March 38000 58000 16000 9600 121600 Quarter 114000 174000 66650 39990 394640 Februa 30160 447400 477560 Cash Budget Beginning Cash Balance Add: Cash Collections Total Cash Available Less: Cash Disbursements For Inventory For Equipment For Cash Dividends For Expenses Total Cash Disbursements Excess (Deficiency) of Cash Financing: Borrowings Repayments Interest Total Financing Ending Cash Balance Janua 63000 300000 363000 March 32560 548000 580560 Quarter 63000 1295400 1358400 229200 0 45000 128640 402840 39840 297300 3300 0 144400 445000 32560 248325 81500 0 121600 451425 129135 774825 84800 45000 394640 1299265 59135 70000 0 0 72000 -2100 74100 55035 70000 -72000 2100 4100 55035 0 70000 30160 32560 Answer to Part 4. Hillyard Company Income Statement For the Quarter Ended March 31 Sales Cost of Goods sold Beginning Inventory Purchases Goods available for Sale Ending Inventory Cost of Goods sold Gross Profit Selling and Administrative Expenses: Salaries and Wages Advertising Shipping Other Expenses Depreciation Total Selling and Adminitrative Expenses Net Operating Income Interest Expense Net Income 1333000 61200 771000 832200 32400 799800 533200 114000 174000 66650 39990 45780 440420 92780 2100 90680 Answer to Part 5 Hillyard Compan Balance Sheet March 31 Assets Current Asstes: Cash Accounts Receivable Inventory Total Current Assets Building and Equipment, net Total Assets 55035 256000 32400 343435 412020 755455 Liabilities and Stockholders' Equity Current Liabilities: Accounts Payable Stockholders' Equity: Common Stock Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity 88200 500000 169255 669255 757455