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 As of December 31 (the end of the prior quarter), the company's general ledger showed the following account balances: a. Cash Accounts receivable Inventory Buildings and equipment (net)367,000 Accounts payable Common stock Retained earnings 57,000 213,600 60,300 90,225 500,000 107,675 S 697,900 $ 697,900 b. Actual sales for December and budgeted sales for the next four months are as follows December(actual) January February March Aprill $267,000 $402,000 5599,000 $314.000 $210.000 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 The company's gross margin is 40% of sales (in other words, cost of goods sold is 60% of sales ) d e. Monthly expenses are budgeted as follows: salaries and wages, $32.000 per month advertising $64000 per month shipping. 5% of sales other expenses. 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $44,820 for the quarter Each months ending inventory should equal 25% of the following month s cost of goods sold. f g. One-half of a month's inventory purchases is paid for in the month of purchase, the other half is paid in h During February, the company will purchase a new copy machine for $2,700 cash. During March, other i the following month equipment will be purchased for cash at a cost of $78,500 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 the so o The comy ld, as far as i is eble, repay the loan plus accumulated interest at end of the quarter