Problem 8-31 Completing a Master Budget (LO8-2, L08-4. LO8-7, LO8-8, LO8-9, LO8-10] Hillyard 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 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 Common stock Retained earnings $ 59,000 215,200 60,600 369,000 $ 90,825 500,000 112,975 $703,800 $ 703,800 b. Actual sales for December and budgeted sales for the next four months are as follows: December (actual) $269,000 January $404,000 February $601,000 March $316,000 April $212,000 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. (In other words, cost of goods sold is 60% of sales.) e. Monthly expenses are budgeted as follows: salaries and wages, $34,000 per month: advertising, $62.000 per month, shipoing, 5% of sales other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $45.140 for the quarter Each month's ending Inventory should equal 25% of the following month's cost of goods sold. q. One-half of a month's Inventory purchases is paid for in the month of purchase, the other half is paid in the following month h. During February, the company will purchase a new copy machine for $2.900 cash. During March, other equipment will be purchased for cash at a cost of $79.500 1. During January, the company will declare and pay $45.000 in cash vidends J. Management wants to maintain a minimum cash balance of $30,000. The company has an agreement with a local bank that allows the company to borrow in increments of $1.000 at the beginning of each month, The Interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would as far as tsable, 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 1 Schedule of expected cash collections 2- Merchandise purchases budget 2-b. Schedule of expected cash disbursements for merchandise purchases: 3. Cash budget 4. Prepare an absorption costing Income statement for the quarter ending March 31 5. Prepare a balance sheet as of March 31 Complete this question by entering your answers in the tabs below. Required Required Required Required Required Required 2A 2B 3 4 5 Complete the Schedule of expected cash collections: Schedule of Expected Cash Collections January February March Quarter Cash sales S 80,800 $ 120,200 $ 63,200 S 264,200 Credit sales 215,200 323,200 480,800 1,019,200 collections 206,000 $443,400 544,000 1.283.400 Required 1 Required 2A > Total Complete this question by entering your answers in the tabs below. Required Required Required Required Required Required Complete the merchandise purchases budget: Merchandise Purchases Budget January February March Quarter Budgeted cost of 242,400 S 360,800 189.800 goods sold 702,600 Add desired ending 90,1507 47.400031,800731,800 inventory Total needs 332,550 408,000 221,400 824,400 Less beginning 60.600 90.150747.400060,800 inventory Required purchases 271950 $ 317.850 174.000 763,800 *5404,000 sales 60% cost ratio = $242.400. 1360,600 25% = $90.150. Complete this question by entering your answers in the tabs below. Lequired Required Required Required Required Required Complete the schedule of expected cash disbursements for merchandise purchases Schedule of Expected Cash Disbursements for Merchandise Purchases January February March Quarter December purchases $ 90,825 S S S 90,825 January purchases 135,975 135,975 2 71.950 February purchases 158,921158,921317,850 March purchases 87.000 87.000 Total cash disbursements for purchases 226 800 $ 294,900 245.925 767,625 Complete this question by entering your answers in the tabs below. Required Required Required Required Required Required 2A 2B 3 4 5 Complete the cash budget. (Cash deficiency, repayments and interest should be indi by a minus sign.) Hillvard Company Cash Budget January February March Quarter Beginning cash balance $ 59,000 $ 30,880 S 32,400S 59,000 Add cash collections 296,000 443,400M544,000 1,283,400 Total cash available 355,000 474,280 576,400 1,342,400 Less cash disbursements: Inventory purchases 226,800 294,900 245,92 767,62! Selling and administrative 128,320 144.080121,280 393.680 expenses Equipment purchases 2.900 79,500 82.400 Cash dividends 45,000 45,000 Total cash disbursements 400,120 4 41,880 446,705 1,288,705 Excess (deficiency) of cash (45,120) 32.400 129,695 53,695 Financing Borrowings Repayments 76.001 1 (76.000 (1,520 (77.520) $ 52,175 76.001 (76,000 1,520 1,520 $ 56.215 Total financing Ending cash balance 76.000 S 30,880 S 32.400 Complete this question by entering your answers in the tabs below. Required Required Required Required Required Required 2A 2B 3 Prepare an absorption costing income statement for the quarter ending March 31. Hillyard Company Income Statement For the Quarter Ended March 31 Sales 1.321.000 Cost of goods sold: 792.600X 792,600 792,600 528,400 Gross margin Selling and administrative expenses: Salanes and wagos Advert sing Shipping Other expenses Interest expense 102.001 186,000 66,050 39.630 393.680 134.220 45,141 89,580 Depreciaton Net Income $ Required 3 Required 5 > Complete this question by entering your answers in the tabs below. Required Required Required Required Required Required 1 2A 2B 3 4 5 Prepare a balance sheet as of March 31. Hillyard Company Balance Sheet March 31 Assets Current assets: Cash S55.214x Accounts receivable 252,800 Inventory Buildings and 496,540% equipment, net Total current assets Buildings and equipment, 804,555 496,540% net Total assets 1,301,095 Liabilities and Stockholders' Equity Current abilities: Accounts payable Stockholders' equity Common stock x 0 cach Total abilities and stockholders equity $ 87,000