Please do the

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 31 (the end of the prior quarter), the company's general ledger showed the following account balances: Cash Accounts receivable Inventory Buildings and equipment (net) Accounts payable Capital shares Retained earnings Debits Credits $ 47,000 232,000 63,000 366,000 $ 95,000 500,000 113,000 $ 708,000 $ 708,000 b. Actual sales for December and budgeted sales for the next four months are as follows: December (actual) January February March $ 290,000 420,000 670,000 310,000 180,000 April 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, $69,000 per month; shipping, 5% of sales; depreciation, $15,000 per month; other expenses, 3% of sales. f. 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 half are paid for in the following month. h. During February, the company will purchase a new copy machine for $3,000 cash. During March, other equipment will be purchased for cash at a cost of $83,000. i. During January, the company will declare and pay $43,000 in cash dividends. j. The company must maintain a minimum cash balance of $28,000. 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 $1,000. Interest is paid only at the time of payment of principal. The annual interest rate is 12%. (Figure interest on whole months, e.g., 1/12, 2/12.) Required: Using the preceding data, complete the following statements and schedules for the first quarter: 1. Schedule of expected cash collections. Answer is complete and correct. HILLYARD COMPANY Schedule of Expected Cash Collections January February March $ 84,000 $ 134,000 $ 62,000 232,000 336,000 536,000 Quarter Cash sales Credit sales $ 280,000 1,104,000 $ 1,384,000 Total cash collections $ 316,000 $ 470,000 $ 598,000 2-a. Inventory purchases budget. Answer is complete and correct. HILLYARD COMPANY Inventory Purchases Budget January February March Quarter Budgeted cost of goods sold $ 252,000$ 402,000 $ 186,000 Add: Desired ending inventory Total needs Deduct: Beginning inventory 100,500 352,500 63,000 46,500 448,500 27,000 213,000 46,500 840,000 27,000 867,000 63,000 $ 804,000 100,500 Required inventory purchases $ 289,500 $ 348,000 $ 166,500 2-b. Schedule of cash disbursements for purchases. Answer is complete and correct. March HILLYARD COMPANY Schedule of Cash Disbursements for Purchases January February December purchases $ 95,000 January purchases 144,750 144,750 February purchases 174,000 March purchases Total cash disbursements for purchases $ 239,750 $ 318.750 Quarter $ 95,000 289,500 348,000 83,250 $ 815,750 174,000 83.250 $257,250 3. Schedule of cash disbursements for expenses. Answer is complete and correct. March HILLYARD COMPANY Schedule of Cash Disbursements for Operating Expenses January February Quarter Salaries and wages $ 25,000$ 25,000$ 25,000$ 75,000 Advertising 69,000 69,000 69,000 207,000 Shipping 21,000 33,500 15,500 70,000 Other expenses 12,600 20,100 9,300 42,000 Total cash disbursements for operating expenses $ 127,600 $ 147,600 $ 118,800 $ 394,000 olololo 4. Cash budget. (Roundup "Borrowing" and "Repayments" answers to the nearest whole dollar amount. Any "Repayments" and "Interest" should be indicated by a minus sign.) Answer is not complete. HILLYARD COMPANY Cash Budget January February $ 47,000 $ 28,650 316,000 470,000 363,000 498,650 Cash balance, beginning Add: Collections from sales March Quarter $ 28,650 X $ 47,000 598,000 1,384,000 626,650 1,431,000 Total cash available Deduct: Disbursements: Purchases of inventory 239,750 127,600 318,750 147,600 3,000 257,250 118,800 83,000 815,750 394,000 86,000 43,000 > 410,350 1,295,750 469,350 29,300 o 459,050 167,230 (47,350) 92,250 Total disbursements Excess (deficiency) of cash Financing: Borrowings Repayments Interest 76,000 OL 1,000 X (75,000) X (2,250) X 76,000 (76,000) (2,270) X (20) X Total financing 76,000 980 (77,250) (2,270) 5. Prepare an income statement for the quarter ending March 31. Answer is not complete. HILLYARD COMPANY Income Statement For the Quarter Ended March 31 $ 1,400,000 $ 63,000 804,000 867,000 27,000 Sales Deduct: Cost of goods sold: Beginning inventory Add: Purchases Goods available for sale Deduct: Ending inventory Salaries and wages Gross margin Deduct: Operating expenses: Operating expenses Depreciation Interest expense 840,000 560,000 x 394,000 X 45,000 2,270 X x 441,270 6. Prepare a balance sheet as of March 31. Answer is not complete. HILLYARD COMPANY Balance Sheet As of March 31 Assets Current assets: Cash Accounts receivable OOO 89,980 X 248,000 27,000 Inventory Total current assets 364,980 Total assets 364,980 Liabilities and Shareholders' Equity Current liabilities: Stockholders' equity: 0 Total shareholders' equity Total liabilities and shareholders' equity 0