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, $37,000 per month: advertising, $59,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $45,620 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 $3,200 cash. During March, other equipment will be purchased for cash at a cost of $81,000.

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:

5. Prepare a balance sheet as of March 31.

*Note. Please use format above. All answers are correct up o and including common stock.

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 62,000 217,600 61,050 372,000 $ 91,725 500,000 120,925 712,650 $ 712,650 $ b. Actual sales for December and budgeted sales for the next four months are as follows: December (actual) January February March $ 272,000 $ 407,000 $ 604,000 $319,000 $ 215,000 April Balance Sheet March 31 Assets $ Current assets: Cash Accounts receivable Inventory 55,615 255,200 32,250 322 343,065 410,580 753,645 $ Total current assets Buildings and equipment, net Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 87,900 Stockholders' equity Common stock Retained earnings 500,000 500,000 587,900 Total liabilities and stockholders' equity $