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 companys gross margin is 40% of sales.
e.	Monthly expenses are budgeted as follows: salaries and wages, $34,000 per month: advertising, $62,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $45,140 for the quarter.
f.	Each months ending inventory should equal 25% of the following months cost of goods sold.
g.	One-half of a months 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 $2,900 cash. During March, other equipment will be purchased for cash at a cost of $79,500.
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.

Required: Using the data above, complete the following statements and schedules for the first quarter 1. Schedule of expected cash collections: Schedule of Expected Cash Collections February January March Quarter S 80,800 Cash sales 215,200 Credit sales S 296,000 Total collections Check Figure: Total Cash Collections for the Quarter 1,283,400 2-a. Merchandise purchases budget Merchandise Purchases Budget January February March Quarter 242,400 360,600 Budgeted cost of goods sold Add desired ending inventory 90,150t Total needs 332,550 Less beginning inventory 60,600 S 271,950 Required purchases Check Figure: Total Merchandise Purchases for the Quarter 763,800 $404,000 sales x 60 % cost ratio $242,400. t$360,600 x 25% $ 90,150. 2-b. Schedule of expected cash disbursements for merchandise purchases: Schedule of Expected Cash Disbursements for Merchandise Purchases March January February Quarter S 90,825 December purchases January purchases 135,975 135,975 February purchases March purchases Total cash disbursements for purchases S 767,625 Check Figure: Total Quarterly Cash Disbursements for Merchandise 3. Cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Hillyard Company Cash Budget January February March Quarter Beginning cash balance 59,000 Add cash collections 296,000 Total cash available 355,000 Less cash disbursements: Purchases of inventory 226,800 128,320 Selling and administrative expenses Purchases of equipment. Cash dividends 45,000 Total eaeh diebueeamente Ann 10 3. Cash budget. (Cash deficiency, repayments and interest should be indicated by minus sign.) a Hillyard Company Cash Budget January February March Quarter S Beginning cash balance 59,000 Add cash collections 296,000 Total cash available 355,000 Less cash disbursements: Purchases of inventory 226,800 Selling and administrative expenses 128,320 Purchases of equipment Cash dividends 45,000 Total cash disbursements 400,120 (45,120) Excess (deficiency) of cash Financing: Borrowings Repayments Interest Total financing Ending cash balance Check Figure for January S 30,880 Check Figure for the Quarter 51,415