CH 8 Quiz

Hillyard Company, an oflice 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 quatter: a. As of December 3 (the end of the ptior quartei), the company's general ledger showed the following account balances: b. Actual sales for December and budgeted sales for the next four months are as follows: C. Soles are 20%6 for castrand 805 on credit. Al payments on uedit sales are coliected in the month following sale. The accounts recelvable at December 31 are a tesilt of December credit sales d. The company's gross margin is 4026 of sales. (in other words, cost of goods sold is 602 of sales) e. Monthly expenses are budgeled as follown: salailes and wages, $24,000 per monlte advertiking, $64,000 per monthe shipping, 5% of sales: other expenses, 3% of siles. Depreciation, including depreciation on new assets acquired dunting the quarter, will be $43,540 for the quarter 1. Eich monthis ending inwentorv should equat 25% of the followina montis cost of qoods sold. .C. Sales are 20% for cash and 80% on credit. All paryments 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 soid is 60% of sales.) e. Monthly expenses are budgeted as follows: salarles and wages, $24,000 per monthz actvertising, $64,000 per month; shipping. 5% of sales; other expenses, 3% of sales, Depreciation, including depreciation on new assets acquired during the quarter, will be $43,540 for the quarter. 1. Each month's ending inventory should equal 25% of the following month's cost of goods sold. 9. One half of a month's imventory purchases is paid for in the month of purchase: the other half is paid in the following month. h. During February. the compary will purchase a new copy machine for $1.900 cash. Duting March, other equipment will be purchased for cash at a cost of $74.500. 1. During January, the company will declare and pay $45,000 in cash dividends. I Management wants to maintain a minkmum cash balance of $30,000. The company has an agreement with a local bank that allows the compaty to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 19 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 plis accumulated interest at the end of the quarter Required: Uting the data above, complete the following statements and schedules for the fist quanter: 1. Schedule of expected cash collections: 2.a. Merchandise purchases budget 2. Schedile of expected cosh disbursements for merchandise purchases: 3. Costh budget 4. Prepare an absorption costing income stotement for the quarter ending March 31 . 5. Prepare a balance sheet as of March 31 . Complete this question by entering your answers in the tabs below. Complete the Schedule of expected cash collections: Complete this question by entering your answers in the tabs below. Complete the merchandise purchases budget: Complete this question by entering your answers in the tabs below. Complete the schedule of expected cash disbursements for merchandise purchases. Complete the cash budget. (Cash deficlency, repayments and interest should be indicated by a minus sig Prepare an absorption costing income statement for the quarter ending March 31. Dronara a halance sheot as of March 31