Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparation of 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: |
Debits | Credits | |||||
Cash | $ | 47,000 | ||||
Accounts receivable | 232,000 | |||||
Inventory | 63,000 | |||||
Buildings and equipment (net) | 366,000 | |||||
Accounts payable | $ | 95,000 | ||||
Capital shares | 500,000 | |||||
Retained earnings | 113,000 | |||||
$ | 708,000 | $ | 708,000 | |||
b. | Actual sales for December and budgeted sales for the next four months are as follows: |
December (actual) | $ | 290,000 | |
January | 420,000 | ||
February | 670,000 | ||
March | 310,000 | ||
April | 180,000 | ||
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. |
e. |
Monthly expenses are budgeted as follows: salaries and wages, $25,000 per month; advertising, $69,000 per month; shipping, 5% of sales; depreciation, $15,000 per month; other expenses, 3% of sales. |
f. |
At the end of each month, inventory is to be on hand equal to 25% of the following month’s sales needs, stated at cost. |
g. |
One-half of a month’s inventory purchases are paid for in the month of purchase; the other half are paid for in the following month. |
h. |
During February, the company will purchase a new copy machine for $3,000 cash. During March, other equipment will be purchased for cash at a cost of $83,000. |
i. | During January, the company will declare and pay $43,000 in cash dividends. |
j. |
The company must maintain a minimum cash balance of $28,000. An open line of credit is available at a local bank for any borrowing that may be needed during the quarter. All borrowing is done at the beginning of a month, and all repayments are made at the end of a month. Borrowings and repayments of principal must be in multiples of $1,000. Interest is paid only at the time of payment of principal. The annual interest rate is 12%. (Figure interest on whole months, e.g., 1/12, 2/12.) |
Required: |
Using the preceding data, complete the following statements and schedules for the first quarter: |
1. | Schedule of expected cash collections. |
2-a. | Inventory purchases budget. |
2-b. | Schedule of cash disbursements for purchases. |
3. | Schedule of cash disbursements for expenses. |
4. |
Cash budget. (Roundup "Borrowing" and "Repayments" answers to the nearest whole dollar amount. Any "Repayments" and "Interest" should be indicated by a minus sign.) |
5. | Prepare an income statement for the quarter ending March 31. |
6. | Prepare a balance sheet as of March 31. |
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 preparation of 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: Debits Credits Cash $ 46,000 Accounts receivable 232,000 Inventory 57,000 Buildings and equipment (net) 375,000 Accounts payable $ 96,000 Capital shares 505,000 Retained earnings 109,000 $ 710,000...
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparation of 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: Debits Credits Cash $ 50,000 Accounts receivable 232,000 Inventory 57,000 Buildings and equipment (net) 367,000 Accounts payable $ 93,000 Capital shares 510,000 Retained earnings 103,000 $ 706,000...
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparation of 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: Credits Cash Accounts receivable Inventory Buildings and equipment (net) Accounts payable Capital shares Retained earnings Debits $ 49,000 224,000 57,000 356,000 $ 93,000 485,000 108,000 $686,000 $686,000...
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparation of 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: Credits Cash Accounts receivable Inventory Buildings and equipment (net) Accounts payable Capital shares Retained earnings Debits $ 48,000 232,000 61,500 375,000 $ 93,000 520,000 103,500 $716,500 $716,500...
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparation of 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: Credits Cash Accounts receivable Inventory Buildings and equipment (net) Accounts payable Capital shares Retained earnings Debits $ 50,000 224,000 61,500 366,000 $ 91,000 505,000 105,500 $701,500 $701,500...
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparation of 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: Credits Cash Accounts receivable Inventory Buildings and equipment (net) Accounts payable Capital shares Retained earnings Debits $ 49,000 224,000 60,000 376,000 $ 93,000 510,000 106,000 $709,000 $709,000...
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: Debit Credit 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 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 $ 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 81,175 $ 668,400 $ 668,400 Actual sales...
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 $ 44,000 Accounts receivable 203,200 Inventory 58,350 Buildings and equipment (net) 354,000 Accounts payable $ 86,325 Common stock 500,000 Retained earnings 73,225 $ 659,550 $ 659,550 Actual sales...
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...