Question

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

Answer 1

ANSWER

As per the given question,

Hillyard Company Sales Budget Sales Cash Credit January February 406000 603000 81200 120600 324800 482400 March 318000 63600 254400 Quarter 1327000 265400 1061600 Collections December January February March Totals January February March 216800 81200 324800 120600 482400 63600 298000 445400 546000 Quarter 216800 406000 603000 63600 1289400 Purchase Budget COGS Add:Desired Inv. January February 243600 361800 90450 47700 334050 409500 -60900 -90450 273150 319050 March 190800 32100 222900 -47700 175200 Quarter 796200 32100 828300 -60900 767400 Less:Opening Inv. Purchases 214000*0.6*0.25 = 29250

Purchase Payments December January February March Totals January February 91425 136575 136575 159525 March Quarter 91425 273150 159525 319050 8760087600 247125 771225 228000 296100 Cash Budget For the Quarter ending March 31... January February March Quarter Opening 6100030520 30000 61000 Collections 298000 445400 546000 1289400 359000 475920 576000 1350400 Payments: Purchase Payments 228000 296100 247125 771225 Salaries and Wages Expense 36000 36000 36000 108000 Advertising Expense 60000 60000 60000 180000 Shipping 20300 30150 15900 66350 Other Expenses 12180 18090 9540 39810 New Copy Machine 3100 3100 Other Equipment 80500 80500 Dividends 45000 45000 Total Payments 401480 443440 449065 1293985 Excess Cash over Payments -42480 32480 126935 56415 Financing Borrowing 73000 73000 Repayment -2431 -70569 -73000 Interest -49 -2117 -2166 Total 73000 -2480 -72686 -2166 Ending Cash Balance 30520 30000 5424954249 32480 - x -0.02x = 30000; 20295 / 1.02 =x; x = 2431 73000 - 2431 = 70569 x 0.03 = 2117

1327000 Statement of Income For the Quarter ending March 31... Sales Less: Cost of goods sold: Opening Inventory 60900 Purchase 767400 Closing Inventory -32100 Gross Margin 796200 530800 Expenses: Salaries and Wages Expense Advertising Expense Shipping Other Expenses Depreciation Interest Expense Net Income 108000 180000 66350 39810 45460 2166 441786 89014 Balance sheet As at March 31 Assets Cash Accounts Receivable Inventory Buildings and equipment (net) Totals 54249 254400 32100 409140 749889 Liabilities Accounts payable 87600 Stockholders Equity Common stock Retained earnings Total Liabilities & Equity 500000 162289 749889 Retained earnings = 118275 + 89014 - 45000 = 162289 Buildings and equipment (net) = 371000 + 3100 + 80500 - 45460 = 409140

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