Hillyard Company an office supplies specialty store, prepares its master budget following data have been assembled to assist in preparation of the master budget for the first quarter quarterly basis. The on a a. As of December 31 (the end of the prior quarter), the company's general ledger showed the following account balances: Debits $ 49,000 216,000 57,000 379,000 Credits Cash Accounts receivable Inventory Buildings and equipment (net) Accounts payable Capital shares Retained earnings $ 93,000 505,000 103,000 $701,000 $701,000 b. Actual sales for December and budgeted sales for the next four months are as follows: December (actual) January February March $270,000 380,000 590,000 280,000 180.000 April 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 Decmbar eredit sales d. The company's gross margin is 40% of sales. 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 e. 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. Type here to search 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 S1,000 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. HILLYARD COMPANY Schedule of Expected Cash Collections January February March Quarter Cash sales Credit sales Total cash collections 0S 0 2-a. Inventory purchases budget HILLYARD COMPANY Inventory Purchases Budget January February March Quarter Tune her. Total needs o.Schedule of cash disbursements for purchases HILLYARD COMPANY Schedule of Cash Disbursements for Purchases January February March Quarter December purchases January purchases February purchases March puchases Total cash disbursements for purchases 0 S S 0 0 $ 0 3. Schedule of cash disbursements for expenses. HILLYARD COMPANY Schedule of Cash Disbursements for Operating Expenses Quarter March February January $ $ 0 Total cash disbursements for operating expenses 0 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.) HILLYARD COMPANY Cash Budget January February March Quarter Total cash available 0 0 Deduct Disbursements: Cash budget. (Roundup "Borrowing" and "Repaymentsa amount. Any "Repayments" and "Interest" should be indicated by a minus sign.) answers to the nearest whole dollar HILLYARD COMPANY Cash Budget February January March Quarter Total cash available 0 0 0 Deduct: Disbursements: Total disbursements 0 0 0 0 Excess (deficiency) of cash Financing Total financing 0 0 0 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 0 0 Deduct Operating expenses 0 6. Prepare a balance sheet as of March 31. HILLYARD COMPANY Balance Sheet As of March 31 Assets Current assets: 0 Total current assets Total assets 0 Liabilities and Shareholders' Equity Current liabilities Stockholders' equity Total shareholders' equity Total liabilities and shareholders equity