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: Debits Credits Cash $45,000 Accounts receivable 204,000 Inventory 58,500 Bulldings and equipnent (net) 355,000 Accounts payable 586,625 Comnon stock 500,000 Retained earnings 75,875 $662,500 $662,560

b. Actual sales for December and budgeted sales for the next four months are as follows: Decenber (actual) $255,000 January $390,000 February $537,000 March $301,000 April $198,000

c. Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sell the accounts receivable at December 31 are a result of December credit sales.

D. The company is gross margin is 40% of sales in other words cost of good sold is 60% of sales.

E. Monthly expenses are budgeted as follows salaries and wages $20,000 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 $42,900.for the quarter.

F. Each month ending inventory should equal 25% of the month cost of good sold.

G. 1/2 of a months inventory purchases is paid for and 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 $1500 cash during March other equipment will be purchased for a cash at a cost of $72,500.

I. During January the company able to Claire 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 $1000 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 to repay the loan plus accumulated interest at the end of the quarter.

Using the data above complete the following statements and schedules for the first quarter

1. Schedule of expected cash collections for January, February, and March
2. A merchandise purchases budget
3. Schedule of expected cash disbursements of merchandise purchases
4. Cash budget
5. Prepare an absorption costing income statement for the quarter ending March 31
6. Prepare a balance sheet as of March 31