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: 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 Common stock Retained earnings 64,000 219,200 61,350 374,000 $ 92,325 500,000 126,225 $ 718,550 $ 718,550 b. Actual sales for December and budgeted sales for the next four months are as follows: December(actual) January February March April $274,000 $409,000 $606,000 $321,000 $217,000 c. Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at December 31 are a result of December credit sales. d. The company's gross margin is 40% of sales. (In other words, cost of goods sold is 60% of sales.) e. Monthly expenses are budgeted as follows: salaries and wages, $39,000 per month: advertising, $57,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $45,940 for the quarter. f. Each month's ending inventory should equal 25% of the following month's cost of goods sold. g. One-half of a month's inventory purchases is paid for in the month of purchase; the other half is paid in the following month. h. During February, the company will purchase a new copy machine for $3,400 cash. During March, other equipment will be purchased for cash at a cost of $82,000. i. During January, the company will declare and pay $45,000 in cash dividends. j. 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. X 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: Quarter Schedule of Expected Cash Collections January February March Cash sales $ 81,800 $ 121,200 $ 64,200 Credit sales 219,200 327,200 484,800 $ Total collections $ 448,400 301,000 549,000 $ 267,200 1,031,200 $ 1,298,400 X 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: Merchandise Purchases Budget January February March Quarter Budgeted cost of goods sold 245,400* $ 363,600 $ 192,600 32,550 48,150 411,750 Add desired ending inventory 90,900+ Total needs 336,300 Less beginning inventory 61,350 $ Required purchases 274,950 *$409,000 sales ~ 60% cost ratio = $245,400. +$363,600 * 25% = $90,900. 90,900 $ 801,600 32,550 834,150 61,350 $ 772,800 225,150 48,150 $ 177,000 $ 320,850 X 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 disbursements for merchandise purchases. Schedule of Expected Cash Disbursements for Merchandise Purchases January February March Quarter December purchases $ 92,325 $ 0 0 $ 92,325 January purchases 137,475 137,475 0 274,950 February purchases 0 160,425 160,425 320,850 March purchases 0 0 88,500 88,500 $ $ Total cash disbursements for purchases $ 297,900 229,800 248,925 776,625 irri 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 cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.) March Quarter Hillyard Company Cash Budget January February $ 64,000 $ 30,480 301,000 448,400 365,000 478,880 Beginning cash balance $ 33, 100 $ Add collections from customers Total cash available 549,000 582, 100 64,000 1,298,400 1,362,400 229,800 297,900 248,925 Less cash disbursements: Inventory purchases Selling and administrative expenses Equipment purchases 776,625 394,880 128,720 144,480 121,680 82,000 3,400 85,400 Cash dividends 45,000 0 0 45,000 Total cash disbursements 445,780 452,605 1,301,905 403,520 (38,520) 33,100 129,495 60,495 69,000 0 0 69,000 Excess (deficiency) of cash Financing: Borrowings Repayments Interest Total financing Ending cash balance 0 0 0 0 (69,000) (2,070) (71,070) 58,425 (69,000) (2,070) (2,070) 58,425 69,000 30,480 $ $ 33,100 $ $ Required 1 Required 2A Required 2B Required 3 Required 4 Regi Prepare an absorption costing income statement for the quarter ending Marc Hillyard Company Income Statement For the Quarter Ended March 31 Sales $ 1,336,000 Cost of goods sold: Beginning inventory 61,350 Purchases 772,800 Goods available for sale 834,150 32,550 801,600 534,400 Ending inventory Gross margin Selling and administrative expenses: Salaries and wages Advertising Shipping 117,000 171,000 66,800 40,080 Other expenses Depreciation 394,880 Net operating income 139,520 Interest expense 2,070 Net income $ 137,450 Required 1 Required 2A Required 2B Required 3 Required 4 Required 5 Prepare a balance sheet as of March 31. Hillyard Company Balance Sheet March 31 Assets Current assets: Cash $ 58,425 Accounts receivable 256,800 32,550 Inventory Total current assets 347,775 Buildings and equipment, net Total assets $ 347,775 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 88,500 Stockholders' equity: Common stock $ 500,000 218,675 Retained earnings 718,675 Total liabilities and stockholders' equity $ 807,175