Hillyard 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 52,000 209,600 Inventory 59,550 ces Buildings and equipment (net) 362,000 Accounts payable $88,725 Common stock 500,000 Retained earnings 94,425 $ 683,150 $ 683,150 b. Actual sales for December and budgeted sales for the next four months are as follows: December (actual) $262,000 ok January $397,000 February $594,000 t ences March April $308,000 $205,000 ces 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. (In other words, cost of goods sold is 60% of sales.) e. Monthly expenses are budgeted as follows: salaries and wages, $27,000 per month: advertising, $67,000 per month; shipping. 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $44,020 for the quarter. 1. 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 $2,200 cash. During March, other equipment will be purchased for cash at a cost of $76,000. 1. 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. Print eferences Required: Using the data above, complete the following statements and schedules for the first quarter: 1. Schedule of expected cash collections: 2-a. Merchandise purchases budget: 2-b. Schedule of expected cash disbursements for merchandise purchases: 3. Cash budget: 4. Prepare an absorption costing income statement for the quarter ending March 31. 5. Prepare a balance sheet as of March 31. Print Required 1 Required 2A Required 2B Required 3 Required 4 Required 5 References Complete the Schedule of expected cash collections: Cash sales Credit sales Total collections Schedule of Expected Cash Collections January February $ 79,400 209,600 $ 289,000 March Quarter Print Required 1 Required 2A Required 2B Required 3 Required 4 Required 5 References Complete the merchandise purchases budget: Merchandise Purchases Budget January February March Quarter Budgeted cost of goods sold 238,200 $356,400 Add desired ending inventory 89,100+ Total needs 327,300 Less beginning inventory 59,550 Required purchases *$397,000 sales x 60% cost ratio = $238,200. t$356,400 x 25% = $89,100. Complete the schedule of expected cash disbursements for merchandise purchases. Schedule of Expected Cash Disbursements for Merchandise Purchases December purchases January purchases February purchases March purchases Total cash disbursements for purchases January $ 88,725 February 133,875 133,875 March Quarter eBook Print ferences Required 1 Required 2A Required 2B Required 3 Required 4 Required 5 Complete the 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 $ 52,000 Add cash collections 289,000 Total cash available Less cash disbursements: Inventory purchases 222,600 Selling and administrative expenses 125,760 Equipment purchases Cash dividends 45,000 Total cash disbursements 393,360 Excess (deficiency) of cash Financing: Borrowings Repayments Interest Total financing Ending cash balance 5 Required 1 Required 2A Required 2B Required 3 Required 4 Required 5 Prepare an absorption costing income statement for the quarter ending March 31. Hillyard Company Income Statement For the Quarter Ended March 31 Cost of goods sold: Selling and administrative expenses: S Prepare a balance sheet as of March 31. Hillyard Company Current assets: eBook Print eferences Total current assets Total assets Current liabilities: Balance Sheet March 31 Assets Liabilities and Stockholders' Equity Stockholders' equity: Total lisilition ne