Hillyard Company, an office 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 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 Inventory Buildings and equipment (net) Accounts payable Common stock Retained earnings 61,000 216,800 60,900 371,000 $ 91,425 500.ee 118,275 709,700 $ 709, 700 $ b. Actual sales for December and budgeted sales for the next four months are as follows: December(actual) January February March April $ 271,000 $ 406,000 $603,000 $318,000 $ 214,000 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. 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, $36,000 per month: advertising, $60,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $45,460 for the quarter. 1. Each month's ending inventory should equal 25% of the following month's cost of goods sold. g. welche i'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 $3,100 cash. During March, other equipment will be purchased 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: 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. 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: Beginning inventory Purchases Goods available for sale 0 Selling and administrative expenses: 0 0 $ 0 Prepare a balance sheet as of March 31. Hillyard Company Balance Sheet March 31 Assets Current assets: Cash $ 47,940 Accounts receivable Inventory Buildings and equipment, net Total current assets 47,940 Total assets 47.940 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accounts payable Stockholders' equity: Accounts payable Common stock Retained earnings 0 Total liabilities and stockholders' equity s 0