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:

3. 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.

4. The companys gross margin is 40% of sales. (In other words, cost of goods sold is 60% of sales.)

5. Monthly expenses are budgeted as follows: salaries and wages, $38,000 per month: advertising, $58,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $45,780 for the quarter.

6. Each months ending inventory should equal 25% of the following months cost of goods sold.

7. One-half of a months inventory purchases is paid for in the month of purchase; the other half is paid in the following month.

8. During February, the company will purchase a new copy machine for $3,300 cash. During March, other equipment will be purchased for cash at a cost of $81,500.

9. During January, the company will declare and pay $45,000 in cash dividends.

10. 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.

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 $ 63,000 218,400 61,200 373,000 $ 92,025 500,000 123.575 $715,600 $ 715,600 b. Actual sales for December and budgeted sales for the next four months are as follows December(actual) January February March April $ 273,000 $ 408,000 $ 605,000 $ 320,000 $ 216,000 Complete this question by entering your answers in the tabs below. Required 1Required 2A Required 2B Required 3 Required 4 Required 5 Complete the Schedule of expected cash collections: Schedule of Expected Cash Collections JanuaryFebruary March $ 81,600 Quarter Cash sales Credit sales Total collections 218,400 $ 300,000 Required 2A> Required 1 Complete this question by entering your answers in the tabs below. Required 1Required 2A Required 2B Required 3 Required 4 Required 5 Complete the merchandise purchases budget Merchandise Purchases Budget JanuaryFebruary March Quarter 244,800 363,000 Budgeted cost of goods sold Add desired ending inventory Total needs Less beginning inventory Required purchases *$408,000 sales 60% cost ratio-$244,800. t$363,000 x 25%-$90,750 90,750t 335,550 61,200 $ 274,350 Required 1 Required 2B> Complete this question by entering your answers in the tabs below. Required 1 Required 2A Required 2BRequired 3 Required 4 Required 5 Schedule of Expected Cash Disbursements for Merchandise Purchases JanuaryFebruary March $ 92,025 Quarter December purchases January 37,175137,175 purchases February purchases March purchases Total cash disbursements for purchases Required 3 Required 2A Complete this question by entering your answers in the tabs below. Required 1 Required 2A Required 2BRequired 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 February March Quarter January 63,000 Beginning cash balance Add cash collections Total cash available Less cash disbursements 300,000 Inventory purchases Selling and administrative expenses Equipment purchases Cash dividends 229,200 128,640 45,000 Total cash disbursements Excess (deficiency) of cash Financing 402,840 Borrowings Repayments Interest Total financing Ending cash balance Complete this question by entering your answers in the tabs below. Required 1 Required 2A Required 2B Required 3Required 4Required 5 Prepare an absorption costing income statement for the quarter ending March 31 Hillyard Company Income Statement For the Quarter Ended March 31 Selling and administrative expenses: Required 3 Required 5 > Required 1 Required 2A Required 2B Required 3 Required 4Required 5 Prepare a balance sheet as of March 31 Hillyard Company Balance Sheet March 31 Assets Current assets: Total current assets Total assets Liabilities and Stockholders' Equity Current liabilities Stockholders' equity: Total liabilities and stockholders' equity Required 5 Required 4