Chapter 7 Problem 10 points 1 Cash Accounts receivable Inventory Buildings and equipment (net) Accounts payable Capital shares Retained earnings Debits Credits $ 49,000 216,000 57,000 379,000 $ 93,000 505,000 103,000 $701,000 $701,000 eBook Print References b. Actual sales for December and budgeted sales for the next four months are as follows: December (actual) January February March April $270,000 380,000 590,000 280,000 180,000 Saved Help Save & Exit Submit 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 company's gross margin is 40% of sales. e. Monthly expenses are budgeted as follows: salaries and wages, $23,000 per month; advertising, $67,000 per month; shipping, 5% of sales; depreciation, $15,000 per month; other expenses, 3% of sales. f. At the end of each month, inventory is to be on hand equal to 25% of the following month's sales needs, stated at cost. g. One-half of a month's inventory purchases are paid for in the month of purchase; the other half are paid for in the following month. h. During February, the company will purchase a new copy machine for $1,000 cash. During March, other equipment will be purchased for cash at a cost of $85,500. i. During January, the company will declare and pay $47,000 in cash dividends. j. The company must maintain a minimum cash balance of $32,000. An open line of credit is available at a local bank for any borrowing that may be needed during the quarter. All borrowing is done at the beginning of a month, and all repayments are made at the end of a month. Borrowings and repayments of principal must be in multiples of $1,000. Interest is paid only at the time of payment of principal. The annual interest rate is 12%. (Figure interest on whole months, e.g., 1/12, 2/12.) Required: Using the preceding data, complete the following statements and schedules for the first quarter: 1. Schedule of expected cash collections. Check my work 1 payment or principal. I ne annual interest rate is 12%. (Figure interest on whole months, e.g., 1/12, 2012) Required: Using the preceding data, complete the following statements and schedules for the first quarter: 1. Schedule of expected cash collections. Check my work 10 points eBook Cash sales Credit sales Print Total cash collections References HILLYARD COMPANY Schedule of Expected Cash Collections 2-a. Inventory purchases budget. Total needs January February March Quarter HILLYARD COMPANY Inventory Purchases Budget January February March Quarter 2-b. Schedule of cash disbursements for purchases. December purchases January purchases HILLYARD COMPANY Schedule of Cash Disbursements for Purchases January February February purchases March purchases Total cash disbursements for purchases March Quarter 1 3. Schedule of cash disbursements for expenses. 10 points eBook HILLYARD COMPANY Schedule of Cash Disbursements for Operating Expenses January February March Quarter Total cash disbursements for operating expenses Print References 4. Cash budget. (Roundup "Borrowing" and "Repayments" answers to the nearest whole dollar amount. Any "Repayments" and "Interest" should be Indicated by a minus sign.) Total cash available Deduct: Disbursements: Total disbursements Excess (deficiency) of cash Financing: Total financing HILLYARD COMPANY Cash Budget January February March Quarter Check my work 5. Prepare an income statement for the quarter ending March 31. HILLYARD COMPANY Income Statement For the Quarter Ended March 31 Deduct: Cost of goods sold: Goods available for sale Deduct: Operating expenses: 6. Prepare a balance sheet as of March 31. Current assets: Total current assets Total assets Current liabilities: Stockholders' equity: HILLYARD COMPANY Balance Sheet As of March 31 Assets Liabilities and Shareholders' Equity Total shareholders' equity Total liabilities and shareholders' equity