Problem 8-31 Completing a Master Budget LOB-2, LOB4, LOB-7, LOB&, LOB-9, LOB-10] Hllyard Company, an office supplies specialty store. prepares its master budget on a quarterly basis. The following deta s 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 tollowing account balances ook 53,000 59,700 363,000 Cash Accounts recelvable210,400 rint Buiidings and equipment (net) $ 99,025 500,000 97,075 $686,100 $696,100 erences Accounts payable Conmon stock b. Actual saies for December and budgeted sales for the next four months are as follows: Decenber (actual)3263,000 January Februasy Karch April $398,000 $595,000 $309,000 $206,000 c Seles are 20% for casn and 80% on cred. Ar payments on creat saes are coteaed in the month owing sae The accounts recelvable at December 31 are a resut of December credit sales. d. The company's gross margin ls 40% or sales. (in other words, cost of goods sold is 60% of sae e Montry expenses are budgeted as tolows salares and wages, $28,000 per month advertising, $68,000 per month, shipping. 5% 0, sales; the expenses, 3% osa es Depreciaton, including deprecation on new assets acquired during the quartes, wl be $44180 for the quarter t Each month's ending inventory should eque 25% of the folowing montrs cost of goods sold. 9 One-haif of a montn's inventory purcnases is pald for in the month of purchase; the otner hair is peid in the oilowing montn h During February, the company wil purcnase a new copy machine for $2.300 cash. During March, other equipment will be purchased for cash ata cost of $76,500 . During January, the company will deciare and pay $45,000 in cash dividends J Management wants to maintain a minimum cash baiance of $30,000. The company has an agreement with a local bank that alows the company to borrow in Increments of 51.000 at the beginning of eachn montn. The interest rate on mese loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would as far as t s able, repay the loan plus accumulated Interest at the end of the quater Required: Using the data above, complete the tollowing statements and scnedules for the "irst quarter 1 Schedule of expected cesh collections 2-a. Mercrand se purchases budget 2-b Schedule of expected cash disbursements for merchandise purchases 3. Cash budget 4. Prepare an absorption costng income statement for the quarter ending Marcn 31 5. Predare a balance sheet as or March 31 Help Save b. Actual sales for December and budgeted sales for the next four months are as folows: December (actual) 8263.000 JanuarY $398,000 $595,000 309,000 $206,000 TebruarY ixareh April c.Sales are 20% for cash and 80% on credt Al payments on cer sales are collected inthe month following sale. The accounts recelvable at December 31 are a result of December credit sales. d.The company's goss margin ts 40% of sales. (in other words, cost of goods sold is 60% of sales e. Monthy expenses are budgeted as tolows salaries and wages, $28000 per month: advertising, $68,000 per t month; shipping. 5% of sales; other expenses, 3% of sales. Depreciation, including depredation on new assets encesacquired during the quarter, will be $44180 for the quarter tEach month sening Inventory shoud equal 25% of the tonowing months cost ofgoods sold. g One-haif of a month's Inventory purchases is paid for in the month of purchase: the other half is paild in the following h During February the company wit purchase a new copy machine for $2.300 cash. During March, other equipment s be purchased for cash at a cost of $76,500. L During January, the compeny wil deciare and pay $45.000 in cash dvidends Management wants to maintain a minimum cash bank that elows the company to borrow in Increments of $1,000 at the beginning of each month. The interest rate on these loans ts ns per month and for simplicity we will essume that interest is not compounded. The company would, as far as Es able, repay the toan plus accumulated interest at the end of the quarter. balance of $30,000. The company has an agreement with a local Required g the data above. complete the following stetements and scredules for the first quarter L Schedule of expected cash collections 2-a Merchandise purchases budget: 2-D Scheduie of expected cash disbursements for merchandise purchases: 3.Cesh budget 4. Prepare an aosorpton costing income statement for the querter ending March 3 Prepare a balence sheet as of March 31 Complete this question by entering your answers in the tabs below. Required Required Required Required Required Required Complete the Schedule of expected cash collections: 2A 2B Cash sales Credit salet Toial 290 2A> Pres sors Ill $398,000 595,000 $309,000 206,000 April cSales are 20%for cash and 80% oncredt All payments on odt sales are col ted in the month following sale. The accounts recelvable at December 31 are a result of December credit sales. d.The companys gross magt, is 40% of sales. an oter words, cost of goods sold is 60% of sales) e. Monthly expenses are budgeted as follows salaries and wages, $28,000 per month advertising, $68,000 per ok i month, shipping, 5% of Sales; other expenses, 3% of sales Depreciaton, idding depreciation on new assets ecquired during the quarter, will be $44,180 for the quarter tEach month's endig inventory should equal 29% of the following monts cost of goods sold. g One-haif of a month's Inventory purchases is paid for in the month of purchase: the other haif is paid in the tolowing mont h During February, the company will purchase a new copy machine for $2,300 cash During March, other equipment will be purchased for cash at a cost of $76,500. LDuring January, the compeny will declare and pay $45,000 in cash dividends ences Management wants to maintain a minimum cash balance of S30000. The company has an ageement with a ocal bank that alows 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 simp icity we will assume that interest is not compounded. The company wouia as far as tis able, repay the loan plus accumulated interest at the end of the quarter Required Using the data above, complete the folowing statements and schedules tor the first quarter t Schedule of expected cash collections 2-a. Merchandise purchases budget 2-a schedule of expected cash Sbursements for mercandse purchases: 3. Cesh budget 4. Prepare an absorption costing income statement tor the quarter ending March 31. 5. Prepare a balance sheet as of March 3t Complete this question by entering your answers in the tabs below. Complete the merchandise purchases budget: Budgeted oost of goods 238800 357,000 Add cesired ending89.250T Total needs 328.050 357,000 Required purchases *S 398 000 sales .60% costra se TCO 268,350 357 $357 000 25% S89 250 December(aotual)8263 000 January FebruaX arch April 398,000 $595,000 $309,000 $206,000 cSales are 20% for cash and 80% on cred. All payments on aedit sales are collected in the month following sale. The accounts recelvable 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 60% of Sales) e. Monthly expenses are budgeted as follows salaries and wages, $28.000 per month advertising, $68,000 per month; shipping. 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquilred during the quarter will be $44180 for the quarter. tEach month's ending inventory should equal 25% of the following months cost ofgoods sold. g One-half of a month's Inventory purchases is paid for in the month of purchase; the other half is pald in the following month. es h During February, the company will purchase a new copy machine for $2.300 cash. During March, other equipment will be purchased for cash at a cost of $76,500 L During January, the compeny will deciare and pay $45,000 in cash dvidends. - Management wants to maintain a minimum cash baiance 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 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 1. Schedule of expected cash co ections 2-a. Merchand se purchases budget 2-b. Schedule of expected cash d'sbursements for merchandise purchases: 3. Cash budget Preaare a alsraton cost ng income statement for me quarter ending Mareh 3t. plete this question by entering your answers in the tabs below. Required Required Required Required Required Required 2B Complete the schedule of expected cash disbursements for merchandise purchases 89 89 ourchasS 223 20D 134 175 357.37 2A