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Page 1 of 2 Master Budget Preparation Chapter 9 Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The
Page of Master Budget Preparation Chapter Hillyard 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 the end of the prior quarter the companys general ledger showed the following account balances: Debits Credits Cash $ Accounts Receivable Inventory Buildings and Equipment net Accounts Payable $ Capital Stock Retained Earnings $ $ b Actual sales for December and budgeted sales for the next four months are as follows: December actual $ January February March April c Sales are for cash and on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at December are a result of December credit sales. d The companys gross profit rate is of sales. e Monthly expenses are budgeted as follows: salaries and wages, $ per month: advertising, $ per month; shipping, of sales; depreciation, $ per month; other expense, of sales. f At the end of each month, inventory is to be on hand equal to of the following months sales needs, stated at costie cost of goods sold g Onehalf of a months inventory purchases is paid for in the month of purchase; the other half is paid for in the following month. h During February, the company will purchase a new copy machine for $ cash. During March, other equipment will be purchased for cash at a cost of $ i During January, the company will declare and pay $ in cash dividends. j The company must maintain a minimum cash balance of $ An open line of credit is available at a local bank for any borrowing that may be needed during the quarter. All borrowing is done at the beginning of a month, and all repayments are made at the end of a month. Borrowings and repayments of principal must be in multiples of $ Interest is paid only at the time of payment of principal. The annual interest rate is Figure interest on whole months, eg Required: Prepare a master budget.
Page
of
Master Budget Preparation
Chapter
Hillyard 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 the end of the prior quarter the companys general
ledger showed the following account balances:
Debits Credits
Cash $
Accounts Receivable
Inventory
Buildings and Equipment net
Accounts Payable $
Capital Stock
Retained Earnings
$ $
b Actual sales for December and budgeted sales for the next four months are as
follows:
December actual $
January
February
March
April
c Sales are for cash and on credit. All payments on credit sales are
collected in the month following sale. The accounts receivable at December
are a result of December credit sales.
d The companys gross profit rate is of sales.
e Monthly expenses are budgeted as follows: salaries and wages, $ per
month: advertising, $ per month; shipping, of sales; depreciation,
$ per month; other expense, of sales.
f At the end of each month, inventory is to be on hand equal to of the
following months sales needs, stated at costie cost of goods sold
g Onehalf of a months inventory purchases is paid for in the month of
purchase; the other half is paid for in the following month.
h During February, the company will purchase a new copy machine for $
cash. During March, other equipment will be purchased for cash at a cost of
$
i During January, the company will declare and pay $ in cash dividends.
j The company must maintain a minimum cash balance of $ An open
line of credit is available at a local bank for any borrowing that may be needed
during the quarter. All borrowing is done at the beginning of a month, and all
repayments are made at the end of a month. Borrowings and repayments of
principal must be in multiples of $ Interest is paid only at the time of
payment of principal. The annual interest rate is Figure interest on
whole months, eg
Required:
Prepare a master budget.
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