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 Debit 61,000 216,800 60,900 371,000 Credit Accounts receivable Inventory Buildings and equipment (net) Accounts payable Common stock Retained earnings $91,425 500,000 118,275 709,700 $709,700 b. Actual sales for December and budgeted sales for the next four months are as follows $271,000 $406,000 $ 603,000 $318,000 $214,000 December(actual) March April 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, $36,000 per month: advertising, $60,000 per month, shipping, 5% of sales, other expenses 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $45,460 for the quarter 5 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 $3,100 cash. During March, other equipment will be purchased for cash at a cost of 80,500. 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 0 increments of $1,000 at the beginning o each month. The interest rate on these loans is 1% per month and for simplicity compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter. e I assum a interes s not Required Using the data above, complete the following statements and schedules for the first quarter: 1. Schedule of expected cash collections Schedule of Expected Cash Collections March January Februa Quarter Cash sales Credit sales Total collections $ 81,200 120,600 63,600 265,400 482,4001,024,000 216,800 324,800 $ 298,000S 445,400 $ 546,000 1,289,400 2-a. Merchandise purchases budget: Merchandise Purchases Budget January February March Quarter Budgeted cost of goods sold Add desired ending inventory Total needs Less beginning inventory Required purchases 243,600"| $ 361,800 $ 190,800 $ 796,200 32,100 334,050 409,500222,900 828,300 60,900 $ 273,150 S 319,050 S 175,200$ 767,400 90,450t 47,700 32,100 60,900 90,450 47,700 2-b. Schedule of expected cash disbursements for merchandise purchases Schedule of Expected Cash Disbursements for Merchandise Purchases February March Quarter January $ 91,425 December purchases January purchases February purchases March purchases Total cash disbursements for purchases $ 91,425 273,150 159,525159,525 319,050 87,600 $ 228,000$ 296,100$ 247,125$ 771,225 136,575 136,575 87,600 3. Cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Hillyard Company Cash Budget February March Quarter January $61,000 Beginning cash balance Add cash collections Total cash available Less cash disbursement 298,000 359,000 Purchases of inventory Selling and administrative expenses Purchases of equipment Cash dividends 228,000 128,480 45,000 401,480 (42,480) Total cash disbursements Excess (deficiency) of cash Financing Borrowings Repayments Interest Total financing Ending cash balance $ (42,480)S 4. Pre Hillyard Company Income Statement For the Quarter Ended March 31 Sales Cost of goods sold: 0 0 Selling and administrative expenses: Depreciation Salaries and wages Advertising Shipping Other expenses 0 0 Net income 0 5. Prepare a balance sheet as of March 31. Hillyard Company Balance Sheet March 31 Assets Current assets: Account receivable Inventory Total current assets 0 Total assets 0 Liabilities and Stockholders' Equity Current liabilities: Account payable Stockholders' equity: 0 Total liabilities and stockholders' equity 0