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 $ 57,000 213,600 60,300 367,000 $ 90,225 500,000 107,675 $ 697,900 $697,900 b. Actual sales for December and budgeted sales for the next four months are as follows: December(actual) $267,000 January $402,000 February $599,000 March $314,000 April $210,000

Answer 1

Hillyard Company Sales Budget Sales Cash Credit January February 402000 599000 80400 119800 321600 479200 March 314000 62800 251200 Quarter 1315000 263000 1052000 Collections December January February March Totals January February March 213600 80400 321600 119800 479200 62800 294000 441400 542000 Quarter 213600 402000 599000 62800 1277400 Purchase Budget COGS Add:Desired Inv. January February March 241200 359400 188400 89850 47100 31500 331050 406500 219900 -60300 -89850 -47100 270750 316650172800 Quarter 789000 31500 820500 -60300 760200 Less:Opening Inv. Purchases 210000*0.6*0.25= 31500 Purchase Payments March December January February March Totals January February 90225 135375 135375 158325 Quarter 90225 270750 316650 86400 764025 158325 86400 244725 225600 293700

Quarter 57000 1277400 1334400 Cash Budget For the Quarter ending March 31... January February March Opening 57000 30240 30000 Collections 294000 441400 542000 351000 471640 572000 Payments: Purchase Payments 225600 293700 244725 Salaries and Wages Expense 32000 32000 32000 Advertising Expense 64000 64000 64000 Shipping 20100 29950 15700 Other Expenses 12060 17970 9420 New Copy Machine 2700 Other Equipment 78500 Dividends 45000 Total Payments 398760 440320 444345 Excess Cash over Payments -47760 31320 127655 Financing Borrowing 78000 Repayment -1294 -76706 Interest -2301 78000 1320 -79007 Ending Cash Balance 30240 30000 48648 76706 x 0.03 = 2301 31320 - x -0.02x = 30000; x = 1294; 1294 x 0.02 = 26 764025 96000 192000 65750 39450 2700 78500 45000 1283425 50975 78000 -78000 -2327 -2327 48648 Total

1315000 Statement of Income For the Quarter ending March 31... Sales Less: Cost of goods sold: Opening Inventory 60300 Purchase 760200 Closing Inventory -31500 Gross Margin 789000 526000 Expenses: Salaries and Wages Expense Advertising Expense Shipping Other Expenses Depreciation Interest Expense Net Income 96000 192000 65750 39450 44820 2327 440347 85653 Balance sheet As at March 31 Assets Cash Accounts Receivable Inventory Buildings and equipment (net) Totals 48648 251200 31500 403380 734728 86400 Liabilities Accounts payable Stockholders Equity Common stock Retained earnings Total Liabilities & Equity 500000 148328 734728 Retained earnings = 107675 +85653 - 45000 = 148328 Buildings and equipment (net) = 367000 + 2700 + 78500 - 44820 = 403380