Answered step by step
Verified Expert Solution
Question
...
1 Approved Answer
Problem 8 - 3 1 ( Algo ) Completing a Master Budget [ LO 8 - 2 , LO 8 - 4 , LO 8
Problem Algo Completing a Master Budget LO LO LO LO LO LO Hillyard Company, an office supplies specialty store, gathered the following information to prepare its master budget for the first quarter of the year: 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 $ Common stock Retained earnings $ $ Actual sales for December and budgeted sales for the next four months are as follows: Decemberactual $ January $ February $ March $ April $ 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. The companys gross margin is of sales. In other words, cost of goods sold is of sales. Monthly expenses are budgeted as follows: salaries and wages, $ per month; advertising, $ per month; shipping, of sales; other expenses, of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $ for the quarter. Each months ending inventory should equal of the following months cost of goods sold. Onehalf of a months inventory purchases is paid for in the month of purchase; the other half is paid in the following month. 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 $ During January, the company will declare and pay $ in cash dividends. Management wants to maintain a minimum cash balance of $ The company has an agreement with a local bank allowing it to borrow in increments of $ at the beginning of each month. The interest rate on these loans is per month, and for simplicity, we will assume 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: Schedule of expected cash collections: a Merchandise purchases budget: b Schedule of expected cash disbursements for merchandise purchases: Cash budget: Prepare an absorption costing income statement for the quarter ending March Prepare a balance sheet as of March
Problem Algo Completing a Master Budget LO LO LO LO LO LO
Hillyard Company, an office supplies specialty store, gathered the following information to prepare its master budget for the first quarter of the year:
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 $
Common stock
Retained earnings
$ $
Actual sales for December and budgeted sales for the next four months are as follows:
Decemberactual
$
January
$
February
$
March
$
April
$
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.
The companys gross margin is of sales. In other words, cost of goods sold is of sales.
Monthly expenses are budgeted as follows: salaries and wages, $ per month; advertising, $ per month; shipping, of sales; other expenses, of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $ for the quarter.
Each months ending inventory should equal of the following months cost of goods sold.
Onehalf of a months inventory purchases is paid for in the month of purchase; the other half is paid in the following month.
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 $
During January, the company will declare and pay $ in cash dividends.
Management wants to maintain a minimum cash balance of $ The company has an agreement with a local bank allowing it to borrow in increments of $ at the beginning of each month. The interest rate on these loans is per month, and for simplicity, we will assume 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:
Schedule of expected cash collections:
a Merchandise purchases budget:
b Schedule of expected cash disbursements for merchandise purchases:
Cash budget:
Prepare an absorption costing income statement for the quarter ending March
Prepare a balance sheet as of March
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started