Hullyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparation of the master budget for the first quarter a. As of December 31 (the end of the prior quarten), the company's general ledger showed the following account balances: b. Actual sales for December and budgeted sales for the next four months are as follows: c. Sales are 20% for cash and 80% on credit All payments on credit sales are collected in the month following sale. The accounts recorvable at December 31 are a result of Docember credit sales d. The company's gross margin is 40% of sales. e. Monthly expenses are budgeted as follows: salaries and wages, $25,000 per month, advertising. $71,000 per month; shipping. 5% of soles; depreciotion, $12.000 per month other expenses, 3% of sales t. At the end of each month, inventory is to be on hand equal to 25% of the following month's sales needs, stated at cost. 9. One-haif of a month's imventary purchases are poid for in the month of purchase, the other half are paid for 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 1. During January, the company will declare and pay $47,000 in cash dividends 1 The companv must maintain a minimum cash balance of $30,000 An open line of credit is avallable at a locat 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, e. Monthly expenses are budgeted as follows salaries and wages, $25,000 per month; advertising. $71.000 per month; shipping. 5% of sales, depreciation, $12,000 per month; other expenses, 3% of sales. t At the end of each month, inventory is to be on hand equal to 25% of the following month's sales needs, stated at cost. g. One half of a month's inventory purchases are paid for in the month of purchase, the other harch, other equipment will be purchased h. During February, the company will purchase a new copy machine for $1,300 cast a cash at cost of $85,500. 1. During January, the company will declare and pay $47,000 in cash dividends. An open line of credit is available at a local bank for any 1. The company must maintain a minimum cash balance of $30,000. An open the beginning of a month, and all repayments are made borrowing that may be needed during the quarter. All borrowing is done at multiples of $1,000. Interest is paid only at the time of at the end of a month. Borrowings and repayments of principal must be in whole months, e.9. 1/12. 2/12) payment of principal. The annual interest rate is 12% (Figure interest on whole months, e. Required: Using the preceding data, complete the following statements and schedules for the first quarter. 1. Schedule of expected cash collections
