Saved Help Save& Exit Submit Check my work Hillyard Company, an office supplies
ID: 2551305 • Letter: S
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Saved Help Save& Exit Submit Check my work 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 Aecounts zeceivable Inventory Buildings and equipment (net) S 42,000 201,600 58,050 352,000 Aceounts payable Conmon stock Retained earnings 5 85,725 500,000 653,650 $ 653,650 b. Actual sales for December and budgeted sales for the next four months are as follows 252,000 387,000 584,000 $298,000 $195,000 Decenber(actual) anuary March April sales are 20% for cash and 80% on credit. Au payments on credit sales are colected in the month following sale The accounts receivable at December 31 are a result of December credit sales c 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, $17000 per month advertising. $57000 per month shioping 51 0 sales: other expenses. 3% of sales. Depreciation, including dereciation on new assets 1of 4 Next>Explanation / Answer
Answer a Sales Budget Jan Feb March Total Sales in Units 387,000 584,000 298,000 1,269,000 Cash Sales - 20% 77,400 116,800 59,600 253,800 Credit Sales - 80% 309,600 467,200 238,400 1,015,200 Answer b Schedule of Expected Cash Collections from Sales Jan Feb March Total Cash Sales 77,400 116,800 59,600 253,800 Collection from Accounts Receivables Dec Sales 201,600 201,600 Jan Sales 309,600 309,600 Feb Sales 467,200 467,200 Total cash Collections 279,000 426,400 526,800 1,232,200 Answer c Merchandise Purchase Budget Jan Feb March Total Cost of Goods Sold - 60% 232,200 350,400 178,800 761,400 Add: Closing Inventory -25% 87,600 44,700 29,250 29,250 Total Needs 319,800 395,100 208,050 790,650 Less: opening Inventory in uints (58,050) (87,600) (44,700) (58,050) Required Purchases 261,750 307,500 163,350 732,600 Answer d Schedule of Cash payments to Suppliers Jan Feb March Total Cash Payment Accounts Payable - Dec 85,725 85,725 Jan Purchases 130,875 130,875 261,750 Feb Purchases 153,750 153,750 307,500 Mar Purchases 81,675 81,675 Total Cash Payment to Suppliers 216,600 284,625 235,425 736,650 Answer e Schedule of Cash payments of Selling & Admn. Budget Jan Feb March Total Salaries & Wages 17,000 17,000 17,000 51,000 Advertising 57,000 57,000 57,000 171,000 Shipping - 5% of Sales 19,350 29,200 14,900 63,450 Other Expense - 3% of Sales 11,610 17,520 8,940 38,070 - Total 104,960 120,720 97,840 323,520 Cash budget Jan Feb March Total Opening cash Balance 42,000 30,440 50,295 42,000 Add: receipts Collection from Customers 279,000 426,400 526,800 1,232,200 Total Cash available 321,000 456,840 577,095 1,274,200 Less: Disbursements Cash Disbursement - Accounts Payable 216,600 284,625 235,425 736,650 Selling & Admn. Exp. 104,960 120,720 97,840 323,520 Purchase of Equipment - 1,200 71,000 72,200 Dividend Paid 45,000 - - 45,000 Total Disbursement 366,560 406,545 404,265 1,177,370 Excess (deficiency) of Cash (45,560) 50,295 172,830 96,830 Add: Finance from Bank 76,000 76,000 Less: Payment to Bank - - (76,000) (76,000) Less: Payment of interet - Bank loan - - (2,280) (2,280) Total Financing 76,000 - (78,280) (2,280) Net Cash Balance Closing 30,440 50,295 94,550 94,550 Income Statement For the Qtr Ending Mar 31 Sales 1,269,000 Cost of Goods Sold - 60% 761,400 Gross Margin 507,600 Less: Selling & Admn. Exp. Salaries & Wages 51,000 Advertising 171,000 Shipping - 5% of Sales 63,450 Other Expense - 3% of Sales 38,070 Dep. 42,420 365,940 Operating Profit 141,660 Less: Interest Expenses 2,280 Net Income 139,380 Balance Sheet As on March 31 Assets Current Assets Cash 94,550 Accounts receivables 238,400 Inventory 29,250 362,200 Fixed Assets Building & Equipment 352,000 Add: Purchases 72,200 Less: Dep. (42,420) 381,780 Total Assets 743,980 Liabilities Accounts Payable 81,675 Total liabilities 81,675 Shareholders's Equity Common Stock 500,000 Retained Earnings 162,305 Total Stockholders equity 662,305 Total liabilities & Stockholders' Equity 743,980 - Schedule of Retained Earnings As on Mar 31 Opening Balance 67,925 Add: net income 139,380 Less: Dividend declared (45,000) Closing Balance 162,305
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