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: S 43,000 Cash Accounts receivable Inventory Buildings and equipment (net) Accounts payable 202,400 58,200 353,000 $ 86,025 5 Reta tock earnings 70,575 656,600 $ 656,600 b. Actual sales for December and budgeted sales for the next four months are as follows: December (actual) $253,000 $388.000 February $585,000 $299,000 $196,000 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, $18,000 per month: advertising, $58,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $42,580 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 $1,300 cash. During March, other equipment will be purchased for cash at a cost of $71,500. i. During January, the company will declare and pay $45,000 in cash dividends. j. Management wants to maintain 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. minimum cash balance of $30,000. The company has an agreement with a local bank that allows Required: Using the data above, complete the following statements and schedules for the first quarter: 1. Schedule of expected cash collections: 2-a. Merchandise purchases budget: 2-b. Schedule of expected cash disbursements for merchandise purchases: 3. Cash budget 4. Prepare an absorption costing income statement for the quarter ending March 31. 5. Prepare a balance sheet as of March 31. Complete this question by entering your answers in the tabs below. Required 1 Required 3 Required 2A Required 2B Required 4 Required 5 Complete the Schedule of expected cash collections: Schedule of Expected Cash Collections March Quarter January February $ 77,600 Cash sales 77,600 Credit sales 202,400 202,400 $ 280,000 $ 280,000 Total collections 0 0 Required 1 Required 2A Complete this question by entering your answers in the tabs below. Required 2A Required 2B Required 3 Required 4 Required 5 Required 1 Complete the merchandise purchases budget: Merchandise Purchases Budget March Quarter January February Budgeted cost of goods sold Add desired ending inventory Total needs 232,800* 351,000 87,750t 320,550 351,000 0 Less beginning inventory Required purchases 58,200 262,350 351,000 $ 0 C *$388,000 sales x 60% cost ratio $232,800 t$351,000x 25% = $87,750. Required 1 Required 2B Complete this question by entering your answers in the tabs below. Required 2A Required 2B Required 3 Required 4 Required 5 Required 1 Complete the schedule of expected cash disbursements for merchandise purchases. Schedule of Expected Cash Disbursements for Merchandise Purchases January March Quarter February December purchases January purchases February purchases March purchases 86,025 86,025 131,175 131,175 262,350 0 $ 217,200 131,175 Total cash disbursements for purchases C 348,375 Required 2A > Required 3 Required 2B Required 3 Required 1 Required 2A Required 4 Required 5 Complete the cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Hillyard Company Cash Budget January February March Quarter Beginning cash balance 43,000 Add cash collections 280,000 Total cash available 323,000 C 0 C Less cash disbursements: Inventory purchases 217,200 Selling and administrative expenses 107,040 Equipment purchases Cash dividends 45,000 Total cash disbursements 369,240 0 C Excess (deficiency) of cash (46,240) C 0 C Financing: Borrowings Repayments Interest Total financing C C 0 Ending cash balance (46,240) C C Required 2B Required 4 Required 1 Required 2B Required 4 Required 2A Required 3 Required 5 Prepare an absorption costing income statement for the quarter ending March 31 Hillyard Company Income Statement For the Quarter Ended March 31 Cost of goods sold: 0 C C Selling and administrative expenses: 0 C $ C Required 2A Required 2B Required 4 Required 5 Required 1 Required 3 Prepare a balance sheet as of March 31 Hillyard Company Balance Sheet March 31 Assets Current assets: Total current assets C $ C Total assets Liabilities and Stockholders' Equity Current liabilities: Stockholders' equity: C $ Total liabilities and stockholders' equity C