Hillyard Company, an ofce 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 rst quarter: a. As of December 31 (the end of the prior quarter), the company's general ledger showed the following account balances: Cash $ 44,000 Accounts receivable 203'200 Inventory 58,350 Buildings and equipment (net) 354300 Accounts payable $ 86,325 Common stock 500,000 Retained earnings 73,225 3 659'5503 659,550 b. Actual sales for December and budgeted sales for the next four months are as follows: December(actual) $254,000 January $389,000 February $586,000 March $300,000 April $197,000 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. . 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, $19,000 per month: advertising, $59,000 per month: shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $42,740 for the quarter. Each month's ending inventory should equal 25% of the following month's cost of goods sold. 9. 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 $1,400 cash. Dun'ng March, other equipment will be purchased for cash at a cost of $72,000. 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. D. '_h Required: Using the data above. complete the following statements and schedules for the rst quarter: 1. Schedule of expected cash collections: Required: Using the data above, complete the following statements and schedules for the rst quarter: 1. Schedule of expected cash collections: as Credit sales Total collections 35 281 .000 $ 281,000 2-a. Merchandise purchases budget: m_ _ mmm m mm $389,000 sales X 50% cost ratio = $233,400. T$351,600 x 25% = $87,900. 2b. Schedule of expected cash disbursements for merchandise purchases: December purchases $ 86,325 $ 131,475 131,475 262,950 3. Cash budget. [Cash deciency, repayments and Interest should be Indicated by a minus sign.) Beginning cash balance 44,000 Add cash collections 281,000 Total cash available Less cash disbursements: Purchases of inventory 217,800 Selling and administrative expenses 109,120 Purchases of equipment Cash dividends Total cash disbursements 45,000 371,920 Excess (deciency) of cash (46,920) Financing: Borrowings Repayments Total nancing Ending cash balance 4. Prepare an absorption costing income statement for the quarter ending March 31. Cost of goods sold: Selling and administrative ex- nses: 5. Prepare a balance sheet as of March 31. Assets - - - - - _' - _ Llabllltles and Stockholders' Equity Current liabilities: Stockholders' equity: Total liabilities and stockholders' HUI