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:

1. As of December 31 (the end of the prior quarter), the companys general ledger showed the following account balances:

Cash	$	56,000
Accounts receivable		212,800
Inventory		60,150
Buildings and equipment (net)		366,000
Accounts payable			$	89,925
Common stock				500,000
Retained earnings				105,025
	$	694,950	$	694,950

2. Actual sales for December and budgeted sales for the next four months are as follows:

December(actual)	$	266,000
January	$	401,000
February	$	598,000
March	$	313,000
April	$	209,000

3. 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.

4. The companys gross margin is 40% of sales. (In other words, cost of goods sold is 60% of sales.)

5. Monthly expenses are budgeted as follows: salaries and wages, $31,000 per month: advertising, $65,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $44,660 for the quarter.

6. Each months ending inventory should equal 25% of the following months cost of goods sold.

7. One-half of a months inventory purchases is paid for in the month of purchase; the other half is paid in the following month.

8. During February, the company will purchase a new copy machine for $2,600 cash. During March, other equipment will be purchased for cash at a cost of $78,000.

9. During January, the company will declare and pay $45,000 in cash dividends.

10. 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: [COMPLETED]

Schedule of Expected Cash Collections
	January	February	March	Quarter
Cash sales	$80,200	$119,600	$62,600	$262,400
Credit sales	212,800	320,800	478,400	1,012,000
Total collections	$293,000	$440,400	$541,000	$1,274,400

2-a. Merchandise purchases budget: [COMPLETED]

Complete the merchandise purchases budget:

Merchandise Purchases Budget
	January	February	March	Quarter
Budgeted cost of goods sold	240,600*	$358,800	$187,800	$787,200
Add desired ending inventory	89,700	46,950	31,350	31,350
Total needs	330,300	405,750	219,150	818,550
Less beginning inventory	60,150	89,700	46,950	60,150
Required purchases	$270,150	$316,050	$172,200	$758,400
*$401,000 sales 60% cost ratio = $240,600.
$358,800 25% = $89,700.

2-b. Schedule of expected cash disbursements for merchandise purchases: [COMPLETED]

Schedule of Expected Cash Disbursements for Merchandise Purchases
	January	February	March	Quarter
December purchases	$89,925	$0	$0	$89,925
January purchases	135,075	135,075	0	270,150
February purchases	0	158,025	158,025	316,050
March purchases	0	0	86,100	86,100
Total cash disbursements for purchases	$225,000	$293,100	$244,125	$762,225

3. Cash budget: (NEED HELP)

Complete the cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.)

4. Prepare an absorption costing income statement for the quarter ending March 31. (NEED HELP)

Prepare an absorption costing income statement for the quarter ending March 31.

5. Prepare a balance sheet as of March 31. (NEED HELP)

March Quarter Hillyard Company Cash Budget January February $ 56,000 293,000 349,000 Beginning cash balance Add collections from customers Total cash available 0 0 Less cash disbursements: Inventory purchases Selling and administrative expenses Equipment purchases Cash dividends 225,000 128,080 L Total cash disbursements 45,000 398,080 (49,080) 0 0 Excess (deficiency) of cash Financing: Borrowings Repayments Interest Total financing Ending cash balance $ (49,080) $ Hillyard Company Income Statement For the Quarter Ended March 31 Cost of goods sold: Selling and administrative expenses: Hillyard Company Balance Sheet March 31 Assets Current assets: Total current assets 0 Total assets $ 0 Liabilities and Stockholders' Equity Current liabilities: Stockholders' equity: Total liabilities and stockholders' equity