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Hilyard Company, an office supplles 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 COMO Stock Satained earnings 55.000 212.000 40.000 365.000 $19.625 500,000 102.375 692,000 3692.000 b. Actual sales for December and budgeted sales for the next four months are as follows: December(actual) January Tebrary March 5265.000 5400,000 3597,000 $312.000 $200,000 Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month followin 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. $30,000 per month advertising $56,000 per monthshipping. 5% of sales other expressa soles. Depreciation, including depreciation on new 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 $2.500 cash. During March, other equipment will be purchased for cash at a cost of $77.500 During January, the company will declare and pay $45.000 in cash dividends. Management wants to maintain a minimum cash balance of $30.000. The company has an agreement with a local bank that lows the company to borrow in increments of $1000 at the beginning of each month The interest rate on these loans ist 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 quarto Schedule of expected cash collections 2. Merchandise purchases budget 2. Schedule of expected cash disbursements for chandise purchase 3. Cashbudget 4. Prepare an absorption costing income statement for the quarter ending March 31 5. Prepare a balance sheet as of March C w DO
