Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparation of 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 Capital shares Retained earnings Debits Credits $ 52,000 216,000 61,500 385,000 $ 94,000 510,000 110,500 $714,500 $714,500 b. Actual sales for December and budgeted sales for the next four months are as follows: December (actual) January February March April $270,000 410,000 620, eee 320,000 190,000 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. e. Monthly expenses are budgeted as follows: salaries and wages, $25,000 per month; advertising, $70,000 per month; shipping, 5% of sales; depreciation, $15,000 per month; other expenses, 3% of sales. f. 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. 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 $4,800 cash. During March, other equipment will be purchased for cash at a cost of $85,000. i. During January, the company will declare and pay $44,000 in cash dividends. j. The company must maintain a minimum cash balance of $29,000. 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 $1,000. 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.) 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 Deduct: Disbursements: Total disbursements Excess (deficiency) of cash Financing: Total financing 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 Deduct: Operating expenses: 6. Prepare a balance sheet as of March 31. HILLYARD COMPANY Balance Sheet As of March 31 Assets Current assets: Total current assets Total assets Liabilities and Shareholders' Equity Current liabilities: Stockholders' equity: Total shareholders' equity Total liabilities and shareholders' equity