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: Debits Credits Cash $ 48, 000 Accounts receivable 232, 000 Inventory 61, 500 Buildings and equipment (net) 375, 000 Accounts payable $ 93, 000 Capital shares 520, 000 Retained earnings 103, 500 $716, 500 $716, 500 b. Actual sales for December and budgeted sales for the next four months are as follows: December (actual) $290 , 000 January 410, 000 February 640, 000 March 310, 000 April 210, 000gun 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. Monthly expenses are budgeted as follows: salaries and wages, $25,000 per month; advertising, $71,000 per month; shipping, 5% of sales; depreciation, $12,000 per month; other expenses, 3% of sales. 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 . One-half ofa month's inventory purchases are paid for in the month of purchase; the other half are paid for in the following month. . During February, the company will purchase a new copy machine for $1,300 cash. During March, other equipment will be purchased for cash at a cost of $85,500. . During January, the company will declare and pay $47,000 in cash dividends. . The company must maintain a minimum cash balance of $30,000. 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.) Required: Using the preceding data, complete the following statements and schedules for the rst quarter: 1. Schedule of expected cash collections. 0 Answer is complete and correct. Cash sales $ 82,000 0 $123,000 0 $ 62,000 9 $ 272,000 0 Credit sales 232,000 0 328,000 0 512,000 9 1,072,000 0 Total cash collections $ 314.000 $ 456,000 $ 574,000 1,344,000 2-a. Inventory purchases budget. 0 Answer is complete and correct. Budgeted cost of goods sold $ 246,000 0 $ 384,000 0 $186,000 9 $ Add: Desired ending inventory 96,000 0 46,500 0 31,500 0 31,500 0 Total needs 342,000 0 430,500 0 217,600 0 647,500 0 Deduct: Beginning inventory (61,500) 0 (96,000) 0 (46,500) 0 (61,500) 9 Required inventory purchases $ 280.500 0 $ 334,500 0 $171,000 9 $786 000 0 816,000 a 2-b. Schedule of cash disbursements for purchases. Answer is complete and correct. HILLYARD COMPANY Schedule of Cash Disbursements for Purchases January February March Quarter December purchases $ 93,000 V $ 93,000 January purchases 140,250 V 140,250 V 280,500 February purchases 167,250 V 167,250 334,500 March purchases 85,500 85,500 Total cash disbursements for purchases $ 233,250 $ 307,500 $ 252,750 $ 793,5003. Schedule of cash disbursements for expenses. 0 Answer is complete and correct. Salaries and wages o $ 25.000 9 $ 25,000 9 $ 25,000 0 $ 75,0009 Advertising 0 213,000 0 Other expenses 0 40,800 0 Total cash disbursements for operating expenses ___$ 396,800 \f6. Prepare a balance sheet as of March 31. Total shareholders' equity Total liabilities and shareholders' equity 0