PROBLEM 8-31 Completing a Master Budget LO8-2, LOS-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: b. Actual sales for Doceinber and budgeted sales for the next four niveths ace as follows. c. Sales aro 20% for cest and 80% on cedil. All payments oo crodit tales are collicadod in the moeth folloaing sale. The accounts receivoble at December 31 are a revalt of Decenter credit sales d. The company's gross margin is 40% of salet. (ln ober words, oont of goods sold is 607 of sales.). e. Montbly expesses are bodgeted as follows; alalaries and wagen, 527,000 per motith adverinieg. $70,000 per month; shipping. 5% of sales, other expenses, 3\% of ales. Depreciation, inchuding depre. ciation on new assets acquired during the quarier, will be \$42,000 for the qparter. f. Each moeth's ending inveatory should equal 25% of the following month' cost of goodu sold. 8. Ooe-half of a month's invertory purchates is p atid for in the moeth of purchate, the other half is peid in the following moeh. b. During February, the company will purchase a new copy machioe for 51,700 cash. Durias Marchi. other equipment will be purctased for cesh at a cost of 584,500 . 1. During January, the compary will deelere and pay 545,000 io cash dividensis. 3. Management wants to maintain a mitimum cash balance of 530,000 . The cormpany has an atrecment with a local bank that allows the coempany to borrow in increments of 51,000 at the beginnies of eact moeth. The interest rate on tbeie loans is 1% per month and for simplicity we will assume that interect is not compounded. The compacy would, as fir as it is able, frpey the loan plet accumulated itherest at the end of the quarter. Requiredi: Using the data above, complete the following statemeass and schodules for the first quarter 2. a. Merchandise purchases budgett b. Schedule of expected cash disbursements for merchandise parchases: 3. Cash budget: 4. Using Schedale 9 as your guide, prepare an absorption costing income statement for the quarter ending March 31 . 5. Prepare a balance sbeet as of March 31