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:

2 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 57,000 213,600 60,300 367,000 $ 90, 225 500,000 107,675 $ 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 April $267,000 $402,000 $599,000 $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. 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, $32,000 per month: advertising, $64,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $44,820 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 $2,700 cash. During March, other equipment will be purchased for cash at a cost of $78,500. 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 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. 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 $ 57,000 294,000 351,000 0 0 0 225,600 128,160 Beginning cash balance Add collections from customers Total cash available Less cash disbursements: Inventory purchases Selling and administrative expenses Equipment purchases Cash dividends Total cash disbursements Excess (deficiency) of cash Financing Borrowings Repayments Interest Total financing Ending cash balance 45,000 398,760 (47,760) 0 0 0 0 0 0 0 0 0 $ (47,760) $ 0 $ 0 S 0 Complete this question by entering your answers in the tabs below. Required 1 Required 2A Required 2B Required 3 Required 4 Required 5 Prepare an absorption costing income statement for the quarter ending March 31. Hillyard Company Income Statement For the Quarter Ended March 31 Sales S 1,315,000 60,300 760,200 820,500 31,500 Cost of goods sold: Beginning inventory Purchases Goods available for sale Ending inventory Gross margin Selling and administrative expenses: Salaries and wages Advertising Shipping Depreciation 789,000 526,000 96,000 192,000 65,750 44,820 39,450 Other expenses 438,020 87,980 Net operating income Interest expense Net income $ 87,980 Complete this question by entering your answers in the tabs below. 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: Accounts receivable $ 251,200 31,500 Inventory Total current assets 282,700 403,380 686,080 S Buildings and equipment, net Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 86,400 Stockholders' equity: Common stock Retained earnings $ 500,000 500,000 586,400 Total liabilities and stockholders' equity S