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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

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: As of December 31 (the end of the prior quarter), the company's general ledger showed the following account balances: Debits Credits Cash $ 50,000 Accounts receivable 216,000 Inventory 57,000 Buildings and equipment (net) 371,000 Accounts payable $ 91,000 Capital shares 500,000 Retained earnings 103,000 $ 694,000 $ 694,000 Actual sales for December and budgeted sales for the next four months are as follows: December (actual) $ 270,000 January 380,000 February 570,000 March 240,000 April 220,000 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 company's gross margin is 40% of sales. Monthly expenses are budgeted as follows: salaries and wages, $26,000 per month; advertising, $70,000 per month; shipping, 5% of sales; depreciation, $14,000 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

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