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: Debit 5 Credits Cash 5 52,800 Accounts receivable 216,660 Inventory 61, 500 Buildings and equipment (net) 385,860 Accounts payable $ 94,866 Capital shares 518,860 Retained earnings 118,560 $714,509 $714,500 b. Actual sales for December and budgeted sales for the next four months are as follows: December (actual) $278,860 Januaryr 418, 860 Februaryr 528,860 March 328, 866 April 193, 860 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. 1'. At the end of each month, inventory is to be on hand equal to 25% of the following months sales needs, stated at cost g. Onehalf 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 ofcredit is available at a local bank for any borrowing that may be needed during the quarter. All borrowing is done at the beginning ofa month, and all repayments are made at the end ofa 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., 1f12, 2112.] 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 $ 82,000 $ 124,000 $ 64,000 $ 270,000 Credit sales 328,000 196,000 256,000 1,080,000 Total cash collections $ 410,000 $ 620,000 $ 320,000 $ 1,350,000 2-a. Inventory purchases budget. HILLYARD COMPANY Inventory Purchases Budget January February March Quarter Budgeted cost of goods sold $ 246,000 $ 372,000 $ 192,000 $ 810,000 Add: Desired ending inventory Total needs Deduct: Beginning inventory Required inventory purchases2-b. 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 purchases Total cash disbursements for purchases 3. Schedule of cash disbursements for expenses. HILLYARD COMPANY Schedule of Cash Disbursements for Operating Expenses January February March Quarter Salaries and wages Advertising Shipping Other expenses Total cash disbursements for operating expenses $ 0 $ 0 $ 0 $ 04. 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 Cash balance, beginning Add: Collections from sales Total cash available 0 0 0 0 Deduct: Disbursements: Purchases of inventory Operating expenses Purchases of equipment Cash dividends Total disbursements 0 0 0 Excess (deficiency) of cash Financing: Borrowings Interest Repayments Total financing 0 0 0 0 Cash balance, ending5. Prepare an income statement for the quarter ending March 31. HILLYARD COMPANY Income Statement For the Quarter Ended March 31 Sales Deduct: Cost of goods sold: Beginning inventory Add: Purchases Goods available for sale 0 Deduct: Ending inventory 0 Gross margin Deduct: Operating expenses: Salaries and wages Advertising Shipping Other expenses Depreciation Operating expenses 0 Net operating income Interest expense Net income6. Prepare a balance sheet as of March 31. HILLYARD COMPANY Balance Sheet As of March 31 Assets Current assets: Cash Accounts receivable Inventory Total current assets 0 Buildings and equipment, net Total assets Liabilities and Shareholders' Equity Current liabilities: Accounts payable Stockholders' equity: Capital shares Retained earnings Total shareholders' equity C Total liabilities and shareholders' equity 0