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 $ 50,000 232,000 57,000 367,000 $ 93,000 510,000 103,000 $706,000 $706,000 b. Actual sales for December and budgeted sales for the next four months are as follows: December (actual) January February March April $290,000 380,000 570,000 280,000 180,000 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. e. Monthly expenses are budgeted as follows: salaries and wages, $26,000 per month; advertising, $67,000 per month; shipping, 5% of sales; depreciation, $14,000 per month; other expenses, 3% of sales. f. 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. g. 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 $1,400 cash. During March, other equipment will be purchased for cash at a cost of $85,500. i. During January, the company will declare and pay $47,000 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, e.g., 1/12, 2/12.) Required. Required: Using the preceding data, complete the following statements and schedules for the first quarter: 1. Schedule of expected cash collections. Answer is not complete. HILLYARD COMPANY Schedule of Expected Cash Collections January February March Quarter Cash sales Credit sales Total cash collections $ 0 $ 0 S 0 $ 0 2-a. Inventory purchases budget. Answer is not complete. HILLYARD COMPANY Inventory Purchases Budget January February March Quarter Budgeted cost of goods sold Add: Desired ending inventory Total needs 2-b. Schedule of cash disbursements for purchases. % Answer is not complete. 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 $ 0 $ 0 $ 0 $ 0 3. Schedule of cash disbursements for expenses. Answer is not complete. HILLYARD COMPANY Schedule of Cash Disbursements for Operating Expenses January February March Quarter Total cash disbursements for operating expenses $ 0 $ 0 $ 0 $ 0 4. Cash budget. (Roundup "Borrowing" and "Repayments" answers to the nearest whole dollar amount. Any "Repayments" and "Interest" should be indicated by a minus sign.) Answer is not complete. HILLYARD COMPANY Cash Budget January February March Quarter Total cash available 0 0 0 O 0 Deduct: Disbursements: 0 0 0 Total disbursements Excess (deficiency) of cash Financing: Total financing 0 0 0 0 5. Prepare an income statement for the quarter ending March 31. Answer is not complete. HILLYARD COMPANY Income Statement For the Quarter Ended March 31 Deduct: Cost of goods sold: Goods available for sale 0 0 Deduct: Operating expenses: 0 6. Prepare a balance sheet as of March 31. Answer is not complete. HILLYARD COMPANY Balance Sheet As of March 31 Assets Current assets: Total current assets 0 Total assets 0 Liabilities and Shareholders' Equity Current liabilities: Stockholders' equity: 0 Total shareholders' equity Total liabilities and shareholders' equity 0