3. 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.

4. The companys gross margin is 40% of sales. (In other words, cost of goods sold is 60% of sales.)

5. Monthly expenses are budgeted as follows: salaries and wages, $16,000 per month: advertising, $56,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $42,260 for the quarter.

6. Each months ending inventory should equal 25% of the following months cost of goods sold.

7. One-half of a months inventory purchases is paid for in the month of purchase; the other half is paid in the following month.

8. During February, the company will purchase a new copy machine for $1,100 cash. During March, other equipment will be purchased for cash at a cost of $70,500.

9. During January, the company will declare and pay $45,000 in cash dividends.

10. 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 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 collections:

2-a. 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.

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 41,000 200,800 57,900 351,000 Cash Accounts receivable Inventory Buildings and equipment (net) Accounts payable Common stock Retained earnings $ 85,425 500,000 65,275 S 650,700 $ 650,700 b. Actual sales for December and budgeted sales for the next four months are as follows: December(actual) January February March April $251,000 S386,000 $583,000 $297,000 194,000 Complete this question by entering your answers in the tabs below. Required 1Required 2A Required 2B Required 3 Required 4 Required 5 Complete the Schedule of expected cash collections: Schedule of Expected Cash Collections March January February S 77,200 Quarter Cash sales Credit sales Total collections 200,800 S 278,000 Required 2A> Complete this question by entering your answers in the tabs below. Required Required 2A Required 2B Required 3 Required 4 Required 5 Complete the merchandise purchases budget: Merchandise Purchases Budget Quarter January February Marclh Budgeted cost of goods sold Add desired ending inventory Total needs Less beginning inventory Required purchases *$386,000 sales 60% cost ratio t$349,800 x 25% : $87,450. 231,600S 349,800 87,450t 319,050 57,900 S 261,150 $231,600 Required 1 Required 2B > Complete this question by entering your answers in the tabs below. Required Required 2ARequired 2B Required 3 Required 4Required 5 Complete the schedule of expected cash disbursements for merchandise purchases. Schedule of Expected Cash Disbursements for Merchandise Purchases January February March Quarter S 85,425 December purchases January purchases ebruary purchases March purchases Total cash disbursements for purchases 130,575 130,575 Required 2A Required 3> Required Required 2A Required 2B Required 3 Required 4 Required 5 Complete the cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Hillyard Company Cash Budget March January February Quarter S 41,000 Beginning cash balance Add cash collections Total cash available Less cash disbursements 278,000 Inventory purchases Selling and administrative expenses Equipment purchases Cash dividends 216,000 102,880 45,000 Total cash disbursements Excess (deficiency) of cash Financing 363,880 Borrowings Repayments Interest Total financing Ending cash balance Required Required 2A Required 2B Required 3 Required 4Required 5 Prepare an absorption costing income statement for the quarter ending March 31. Hillyard Company Income Statement For the Quarter Ended March 31 Cost of goods sold: Selling and administrative expenses: Required 1Required 2A Required 2B Required 3 Required 4 Required 5 Prepare a balance sheet as of March 31. Hillyard Company Balance Sheet March 31 Assets Current assets: Total current assets Total assets Liabilities and Stockholders' Equity Current liabilities: Stockholders' equity: Total liabilities and stockholders' equity