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 $ 46,000 232,000 58,500 375,000 $ 95,000 512,000 104,500 $711,500 $711,500 b. Actual sales for December and budgeted sales for the next four months are as follows: December (actual) January February March April $ 290,000 390,000 570,000 298,000 209,000 c. Sales are 20% for cash and 80% on credit All payments on credit sales are collected in the month following sale. The accounts 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 10% of sales e Monthly expenses are budgeted as follows: salaries and wages, $27,000 per month; advertising, $71,000 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, stated at cost. 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 $1,500 cash. During March, other equipment will be purchtyed During January, the company will declare and pay $44,000 in cash dividends. J. The company must maintain a minimum cash balance of $32,000. 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, eg. 1/12. 2/12.) Required: Using the preceding data, complete the following statements and schedules for the first quarter: 1. Schedule of expected cash collections 1. Schedule of expected cash collections HILLYARD COMPANY Schedule of Expected Cash Collections January February March Quarter Cash sales Credit sales Total cash collections 2-6. Inventory purchases budget HILLYARD COMPANY Inventory Purchases Budget January February March Quarter 2-a. Inventory purchases budget. HILLYARD COMPANY Inventory Purchases Budget January February March Quarter Total needs 2.b. Schedule of cash disbursements for purchases. March Quarter HILLYARD COMPANY Schedule of Cash Disbursements for Purchases January February 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 Total cash disbursements for operating expenses Connunger 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