Problem 8-29 Completing a Master Budget L08-2, LO8-4, LO8-7, LO8-8, LO8-g Hilyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparing the master budget for the first quarter: As of 31 (the end of the prior quarter, the company's general ledger showed the following 43,000 invento Buildings and equipment (net) 86,025 Common stock 500,000 Retained earnings 70,575 $656,600 656,600 he next four months are as follows: Actual sales for December and budgeted sales for $253,000 December(actual) $388,000 $585,000 February $299,000 $196,000 ts on credit sales are collected es are 20% for cash and 80% on credit. All paymen 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. (In other words, cost of goods sold is 60% of sales) budgeted as follows: salaries and wages, $18,000 per month: advertising, e. Monthly expenses are $58,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including on new assets acquired during the quarter, will be $42,580 for the quarter. f Each month's ending inventory should equal 25% of the following month's cost of goods sold s paid for in the month of purchase: the other half is paid in g. One-half of a month's inventory purchases the following month h. During February, the company will purchase a new copy machine for S1,300 cash. During March, other equipment will be purchased for cash at a cost of $71.500 During January, the company will declare and pay $45,000 in cash dividend Management wants to maintain a minimum cash balance of $30,000. The company has an agreement n increments of $1,000 at the beginning of each with a local bank that allows the company to borrow month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter