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: As of December 31 (the end of the prior quarter), the companys general ledger showed the following account balances: Cash $ 45,000 Accounts receivable 204,000 Inventory 58,500 Buildings and equipment (net) 355,000 Accounts payable $ 86,625 Common stock 500,000 Retained earnings 75,875 $ 662,500 $ 662,500 Actual sales for December and budgeted sales for the next four months are as follows: December(actual) $ 255,000 January $ 390,000 February $ 587,000 March $ 301,000 April $ 198,000 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 companys gross margin is 40% of sales. (In other words, cost of goods sold is 60% of sales.) Monthly expenses are budgeted as follows: salaries and wages, $20,000 per month: advertising, $60,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $42,900 for the quarter. Each months ending inventory should equal 25% of the following months cost of goods sold. One-half of a months inventory purchases is paid for in the month of purchase; the other half is paid in the following month. During February, the company will purchase a new copy machine for $1,500 cash. During March, other equipment will be purchased for cash at a cost of $72,500. During January, the company will declare and pay $45,000 in cash dividends. 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. Required: Using the data above, complete the following statements and schedules for the first quarter: 1. Schedule of expected cash collections: 2-a. Merchandise purchases budget: 2-b. Schedule of expected cash disbursements for merchandise purchases: 3. Cash budget: 4. Prepare an absorption costing income statement for the quarter ending March 31. 5. Prepare a balance sheet as of March 31.

Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2A Required 2B Required 3 Required 4 Required 5 Complete the Schedule of expected cash collections: Schedule of Expected Cash Collections January February March Quarter Cash sales $ 78,000 $ 117,400 $ 60,200 $ 255,600 Credit sales 204,000 312,000 469,600 985,600 $ Total collections $ 429,400 282,000 529,800 1,241,200 Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2A Required 2B Required 3 Required 4 Required 5 Complete the merchandise purchases budget: Quarter $ 766,800 Merchandise Purchases Budget January February March $ Budgeted cost of goods sold 234,000* $352,200 180,600 Add desired ending inventory 88,0507 45,150 29,700 Total needs 322,050 397,350 210,300 Less beginning inventory 58,500 88,050 45,150 $ $ Required purchases 263,550 $ 309,300 165,150 *$390,000 sales * 60% cost ratio = $234,000. +$352,200 x 25% = $88,050. 766,800 766,800 Prepare a balance sheet as of March 31. Hillyard Company Balance Sheet March 31 Assets Current assets: Total current assets 0 $ 0 Total assets Liabilities and Stockholders' Equity Current liabilities: Stockholders' equity: 0 Total liabilities and stockholders' equity $ 0 Required 1 Required 2A Required 2B Required 3 Required 4 Required 5 Prepare an absorption costing income statement for the quarter ending March 31. Hillyard Company Income Statement For the Quarter Ended March 31 Cost of goods sold: 0 0 0 Selling and administrative expenses: 0 0 $ curricuc La YucacH MY CHILCI my your answCI "CHIC LAV UCIUN. 7 Required 1 Required 2A Required 2B Required 3 Required 4 Required 5 4 points Complete the cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Hillyard Company Cash Budget January February $ 45,000 301,000 March $ Quarter 101,780 X 1,241,200 282,000 301,780 X $ 529,800 831,580 429,400 327,000 730,400 1,342,980 218,400 111,200 Beginning cash balance Add collections from customers Total cash available Less cash disbursements: Inventory purchases Selling and administrative expenses Equipment purchases Cash dividends Total cash disbursements (deficiency) of Financing Borrowings Repayments Interest 45,000 374,600 0 0 0 (47,600) 730,400 831,580 2,340 X 2,340 Total financing 0 0 Ending cash balance $ (47,600) $ 730,400 $ 831,580 $ 1,345,320