Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The…
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Question “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: 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 Debits Credits 61,000 216,800 60,900 371,000 $ 91,425 500,000 118,275 $ 709, 700 $709, 700 b. Actual sales for December and budgeted sales for the next four months are as follows: December (actual) January February March April $271,000 $406,000 $603,000 $318,000 $ 214.000
b. Actual sales for December and budgeted sales for the next four months are as follows: December (actual) January February March April $ 271.000 $ 406,000 $603,000 $318,000 $ 214,000 c. 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. d. The company’s gross margin is 40% of sales. (In other words, cost of goods sold is 60% of sales.) e. Monthly expenses are budgeted as follows: salaries and wages, $36,000 per month: advertising, $60,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $45,460 for the quarter. f. Each month’s ending inventory should equal 25% of the following month’s cost of goods sold. g. 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 h. During February, the company will purchase a new copy machine for $3,100 cash. During March, other equipment will be purchased for cash at a cost of $80,500. 1. During January, the company will declare and pay $45,000 in cash dividends. J. 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.
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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. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req3 Req 4 Req 5 Complete the merchandise purchases budget: March Quarter Merchandise Purchases Budget January February Budgeted cost of goods sold 243,600″ $ 361,800 Add desired ending inventory 90,4501 | Total needs 334,050 Less beginning inventory 60,900 Required purchases $ 273,150 *$406,000 sales x 60% cost ratio = $243,600. $361,800 x 25% = $90,450. RAG 28
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. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req3 Reg 4 Reg 5 Complete the schedule of expected cash disbursements for merchandise purchases. Schedule of Expected Cash Disbursements for Merchandise Purchases January February March Quarter December purchases $ 91,425 January purchases 136,575 136,575 February purchases March purchases Total cash disbursements for purchases < Req za Req3 >
Complete the cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sig Hillyard Company Cash Budget January 61,000 298,000 February March Quarter 228,000 128,480 Beginning cash balance Add collections from customers Total cash available Less cash disbursements: Inventory purchases Selling and administrative expenses Equipment purchases Cash dividends Total cash disbursements Excess (deficiency) of cash Financing: Borrowings Repayments Interest Total financing Ending cash balance LIIIIIIII|| 45,000 401,480 1
455lyhent 1 Saved Hillyard Company Income Statement For the Quarter Ended March 31 Cost of goods sold: Selling and administrative expenses:
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
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Hillyard Company Sales Budget Cash Credit January Februarie 406000 603000 324800 324800 382400 March 318000 63600 254400 Quarter January January February 1327000 265400 1161600 Totals January January February 216800 324800 120600 482400 445400 546400 546000 Purchase Budget COGS Add to:Desired Inc. January February 243600 361800 90450 409500 334800 323150 319050 March 318000 32100 222900 -47700 125400 Quarter 796200 32100 828300 767400 -60900 Less:Opening Inc. Purchases of 214000*0.6*0.25 = 292250
Total Purchase Payments December February February March March Totals January February February 91425 136575 1136575 159525 February Quarter 91425 545400 546000 61000 Collections February February February Quarter Opening 61000 30150 159525 159525 180000 Shipping 20300 30150 15900 15900 126945 1293985 Cash Budget for the Quarter Ending March 31… February February March Quarter Opening 359000 36000 61000 61000 61000 61000 61000 61000 61000 61000 1279400 443440 1224540404842480, 73000 35625 -x = 35625 x = 36000 x = 36000 x = 36000 x = 36000 73000 36000 x = 36000 73000 35000 36000 66000 61000 61000 61000 61000 61000 61000 61000 61000 61000 61000 61000 61000 61000 61000 61000 6150 128000 3000 3000 3000 3000 3000 3000 3000 379450 445450 445450 443450 445450 455920 61000 61000 61000 61000 61000 61000 61000 61000 61000 61000 61000 61000 61000 61000 6100 61000 61000 68000 6100 61000 61000 6150 615000 3000 87005600 772225 6000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 135250 61000 6000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 35000 6700 55345025 000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 31000 443450 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 37000 443450 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 771225 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 36000 435450 3000 3000 3000 3000 3000 3
Statement of Income for the Quarter ended March 31,… Sales less: Opening inventory 60900, Closing inventory 767400, -32100 Gross Margin 796200 530800. Balance sheet as at March 31, Assets Cash Inventory Buildings and equipment (net), Totals 54249 254400 322100 749889 Liabilities Totals 87600 Stockholders Equity Common stock Retained Earnings Total Liabilities and Equity 500000 162289 7749889. Retained earnings = 118275 + 89014 + 45000 = 162289500500000 + 3100 + 3100 + 3100 + 8500 -45460 = 409140500 + 3100 = 3100 + 3100 + 3100 + 3100 + 3100 + 8900 -45460 = 409140000 -45460 = 409140000 -45460 = 409140400 –
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