Hillyord Compony, on office supplies specialty store, prepsres its moster budget on a quarterly bosis. The following doto hove been

ossembled to sssist in preparing the master budget for the first quarter:

a$.$ As of December $31($the end of the prior quorter$),$ the compony's general ledger showed the following sccount bslances:

b$.$ Actual sales for December and budgeted ssles for the next four months are ss follows:

c$.$ Sales are $20\%$ for cosh and $80\%$ on credit. All poyments on credit soles are collected in the month following sole. The accounts

receivable at December $31$ are a result of December credit soles.

d$.$ The compony's gross morgin is $40\%$ of sales. $($In other words, cost of goods sold is $60\%$ of sales.$)$

e$.$ Monthly expenses are budgeted os follows: salaries and wages, $$35,000$ per month: advertising, $$61,000$ per month; shipping, $5\%$

of sales; other expenses, $3\%$ of soles. Deprecistion, including deprecistion on new sssets scquired during the quorter, will be

$$45,300$ for the quarter.

f$.$ Exch month's ending inventory should equsl $25\%$ of the following month's cost of goods sold.

g$.$ One$-$holf of $$ month's inventory purchsses is poid for in the month of purchose; the other half is poid in the following month.

h$.$ During February, the compony will purchsse a new copy mochine for $$3,000$ cosh$.$ During March, other equipment will be

purchesed for cosh at $$ cost of $$80,000.$

i$.$ During Janusry, the company will declare and pay $$45,000$ in cosh dividends.

j$.$ Mansgement wonts to maintain a minimum cosh bolance of $$30,000.$ The company hos an agreement with o local bank that allows

the compsny to borrow in increments of $$1,000$ st the beginning of each month. The interest rate on these loans is $1\%$ per month

and for simplicity we will ossume thet interest is not compounded. The compony would, os far as it is able, repsy the loon plus

accumulated interest st the end of the quarter.

Required:

Using the dato above, complete the following statements and schedules for the first quarter:

Schedule of expected cosh collections:

$2-0.$ Merchendise purchoses budget:

$2-$b$.$ Schedule of expected cosh disbursements for merchsndise purchsses:

Cosh budget

Prepore on absorption costing income statement for the quarter encing Morch $31.$

Prepore o bolance sheet as of March $31.$

Complete this question by entering your answers in the tabs below.

Complete the Schedule of expected cash collections: