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 companys general ledger showed the following account balances Cash $ 56,000 Accounts receivable 212,800 Inventory 60,150 Buildings and equipment (net) 366,000 Accounts payable $ 89,925 Common stock 500,000 Retained earnings 105,025 $ 694,950 $ 694,950 Actual sales for December and budgeted sales for the next four months are as follows December(actual) $ 266,000 January $ 401,000 February $ 598,000 March $ 313,000 April $ 209,000 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 companys gross margin is 40 of sales (In other words, cost of goods sold is 60 of sales ) Monthly expenses are budgeted as follows salaries and wages, $31,000 per month advertising, $65,000 per month shipping, 5 of sales other expenses, 3 of sales Depreciation, including depreciation on new assets acquired during the quarter, will be $44,660 for the quarter Each months ending inventory should equal 25 of the following months cost of goods sold One half of a months inventory purchases is paid for in the month of purchase the other half is paid in the following month During February, the company will purchase a new copy machine for $2,600 cash During March, other equipment will be purchased for cash at a cost of $78,000 During January, the company will declare and pay $45,000 in cash dividends 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 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 2A Required 2B Required 3 Required 4 Required 5 Complete the Schedule of expected cash collections Quarter Schedule of Expected Cash Collections January February March Cash sales $ 80,200 Credit sales 212,800 Total collections $ 293,000 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 merchandise purchases budget Merchandise Purchases Budget January February March Quarter Budgeted cost of goods sold Add desired ending inventory 240,600 $ 358,800 89,7001 Total needs 330,300 Less beginning inventory 60,150 Required purchases $ 270,150 $401,000 sales 60 cost ratio $240,600 $358,800 25 $89,700 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 schedule of expected cash disbursements for merchandise purchases Schedule of Expected Cash Disbursements for Merchandise Purchases January February March Quarter December purchases $ 89,925 January purchases 135,075 135,075 February purchases March purchases Total cash disbursements for purchases 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 ) Hillyard Company Cash Budget January February $ 56,000 293,000 March Quarter Beginning cash balance Add collections from customers Total cash available Less cash disbursements 225,000 128,080 45,000 398,080 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 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 Cost of goods sold Selling and administrative expenses Prepare a balance sheet as of March 31 Hillyard Company Balance Sheet March 31 Assets Current assets Total current assets Total assets Liabilities and Stockholders' Equity Current liabilities Stockholders' equity Total liabilities and stockholders' equity

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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

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 companys general ledger showed the following account balances:


Cash	$	56,000
Accounts receivable		212,800
Inventory		60,150
Buildings and equipment (net)		366,000
Accounts payable			$	89,925
Common stock				500,000
Retained earnings				105,025
	$	694,950	$	694,950

Actual sales for December and budgeted sales for the next four months are as follows:


December(actual)	$	266,000
January	$	401,000
February	$	598,000
March	$	313,000
April	$	209,000

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 companys gross margin is 40% of sales. (In other words, cost of goods sold is 60% of sales.)
Monthly expenses are budgeted as follows: salaries and wages, $31,000 per month: advertising, $65,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $44,660 for the quarter.
Each months ending inventory should equal 25% of the following months cost of goods sold.
One-half of a months inventory purchases is paid for in the month of purchase; the other half is paid in the following month.
During February, the company will purchase a new copy machine for $2,600 cash. During March, other equipment will be purchased for cash at a cost of $78,000.
During January, the company will declare and pay $45,000 in cash dividends.
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.

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.

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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 Schedule of expected cash collections: Quarter Schedule of Expected Cash Collections January February March Cash sales $ 80,200 Credit sales 212,800 Total collections $ 293,000 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 merchandise purchases budget: Merchandise Purchases Budget January February March Quarter Budgeted cost of goods sold Add desired ending inventory 240,600* $ 358,800 89,7001 Total needs 330,300 Less beginning inventory 60,150 Required purchases $ 270,150 *$401,000 sales ~ 60% cost ratio = $240,600. +$358,800 ~ 25% = $89,700. 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 schedule of expected cash disbursements for merchandise purchases. Schedule of Expected Cash Disbursements for Merchandise Purchases January February March Quarter December purchases $ 89,925 January purchases 135,075 135,075 February purchases March purchases Total cash disbursements for purchases 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.) Hillyard Company Cash Budget January February $ 56,000 293,000 March Quarter Beginning cash balance Add collections from customers Total cash available Less cash disbursements: 225,000 128,080 45,000 398,080 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 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 Cost of goods sold: Selling and administrative expenses: Prepare a balance sheet as of March 31. Hillyard Company Balance Sheet March 31 Assets Current assets: Total current assets Total assets Liabilities and Stockholders' Equity Current liabilities: Stockholders' equity: Total liabilities and stockholders' equity