Question

In: Accounting

Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The...

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:

  1. As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances:

Cash $ 48,000
Accounts receivable 224,000
Inventory 60,000
Buildings and equipment (net) 370,000
Accounts payable $ 93,000
Common stock 500,000
Retained earnings 109,000
$ 702,000 $ 702,000

  1. Actual sales for December and budgeted sales for the next four months are as follows:

December(actual) $ 280,000
January $ 400,000
February $ 600,000
March $ 300,000
April $ 200,000

  1. 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.

  2. The company’s gross margin is 40% of sales. (In other words, cost of goods sold is 60% of sales.)

  3. Monthly expenses are budgeted as follows: salaries and wages, $27,000 per month: advertising, $70,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $42,000 for the quarter.

  4. Each month’s ending inventory should equal 25% of the following month’s cost of goods sold.

  5. 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.

  6. During February, the company will purchase a new copy machine for $1,700 cash. During March, other equipment will be purchased for cash at a cost of $84,500.

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

  8. 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.

Solutions

Expert Solution


Related Solutions

Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The...
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: As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances: Cash $ 58,000 Accounts receivable 214,400 Inventory 60,450 Buildings and equipment (net) 368,000 Accounts payable $ 90,525 Common stock 500,000 Retained earnings 110,325 $ 700,850 $ 700,850 Actual sales...
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The...
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: As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances: Debits Credits Cash $ 48,000 Accounts receivable 224,000 Inventory 60,000 Buildings and equipment (net) 370,000 Accounts payable $ 93,000 Common stock 500,000 Retained earnings 109,000 $ 702,000 $ 702,000...
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The...
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: As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances: Debits Credits Cash $ 40,000 Accounts receivable 200,000 Inventory 57,750 Buildings and equipment (net) 350,000 Accounts payable $ 85,125 Common stock 500,000 Retained earnings 62,625 $ 647,750 $ 647,750...
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The...
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: As of December 31, (the end of the prior quarter), the company%u2019s general ledger showed the following account balances: Cash $47,000 Accounts receivable $205,600 Inventory $58,800 Buildings and equipment, net $357,000 Accounts payable $87,225 Common stock $500,000 Retained earnings $81175 Actual sales for December and budgeted sales for...
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The...
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: As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances: Debits Credits Cash $ 42,000 Accounts receivable 201,600 Inventory 58,050 Buildings and equipment (net) 352,000 Accounts payable $ 85,725 Common stock 500,000 Retained earnings 67,925 $ 653,650 $ 653,650...
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The...
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: As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances: Cash $ 64,000 Accounts receivable 219,200 Inventory 61,350 Buildings and equipment (net) 374,000 Accounts payable $ 92,325 Common stock 500,000 Retained earnings 126,225 $ 718,550 $ 718,550 Actual sales...
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The...
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: As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances: Cash $ 61,000 Accounts receivable 216,800 Inventory 60,900 Buildings and equipment (net) 371,000 Accounts payable $ 91,425 Common stock 500,000 Retained earnings 118,275 $ 709,700 $ 709,700 Actual sales...
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The...
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: As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances: Cash $ 50,000 Accounts receivable 208,000 Inventory 59,250 Buildings and equipment (net) 360,000 Accounts payable $ 88,125 Common stock 500,000 Retained earnings 89,125 $ 677,250 $ 677,250 Actual sales...
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The...
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: As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances: Cash $ 60,000 Accounts receivable 216,000 Inventory 60,750 Buildings and equipment (net) 370,000 Accounts payable $ 91,125 Common stock 500,000 Retained earnings 115,625 $ 706,750 $ 706,750 Actual sales...
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The...
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: As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances: Cash $ 64,000 Accounts receivable 219,200 Inventory 61,350 Buildings and equipment (net) 374,000 Accounts payable $ 92,325 Common stock 500,000 Retained earnings 126,225 $ 718,550 $ 718,550 Actual sales...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT