Hillyard Company, an office supplies specialty store, prepares to 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 3 Cash Accounts receivable Inventory Buildings and equipment (net Accounts payable Common stock Retained emings 41 000 20000 57 900 351,000 $ 85 425 500 000 65 275 650 700 S 650, 700 $ b. Actual sales for December and budgeted sales for the next four months are as follows December(actual January Fanuary March $ 251,000 $ 388.000 $ 583.000 $ 297 000 $ 194,000 Apri 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 credt 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. $16.000 per month advertising $50,000 per month shipping, 5% of sales, other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter will be $42.260 for the quarter 1. Each month's ending inventory should equal 25% of the following month's cost of goods sold Q. 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 $1,100 cash. During March, other equipment will be purchased for cash at a cost of $70.500 During January, the company wil 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 alows 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 Required 1 Required 2A Required 2B Required 3 Required 4 Required 5 Complete the Schedule of expected cash collections: Schedule of Expected Cash Collections January February March $ 77,200 Credit sales 200,800 Total collections $ 278,000 $ 0 $ Quarter $ 77,200 200,800 $ 278,000 0 Required 1 Required 2A Required 2B Required 3 Required 4 Required 5 Complete the merchandise purchases budget: Quarter Merchandise Purchases Budget January February March Budgeted cost of goods sold 231,600 $ 349,800 Add desired ending inventory 87.4507 Total needs 319,050 349,8000 Less beginning inventory 57,900 Required purchases 3 261,150 $ 349,800S $386,000 sales 50% cost ratio $231,600 15349,800 * 25% = $87.450. 0 0S 0