value: 500 points Hillyard Company, an office supplies specialty store, prepares
ID: 2569882 • Letter: V
Question
value: 500 points 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: a. Cash Accounts receivable Inventory Buildings and equipment (net)369,000 Accounts payable Common stock Retained earnings S59,000 215,200 60,600 S 90,825 500,000 112,975 $ 703,800 $703,800 b. Actual sales for December and budgeted sales for the next four months are as follows: December(actual) January $269,000 $404,000 $601,000 $316,000 $212,000 March April c. Sales are 20% for following sale. The accounts receivable at December 31 are a result of December cash and 80% on credit. All payments on credit sales are collected in the month 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 S62.000 per month, shipping depreciation on new assets acquired during the quarter, will be $45,140 for the budgeted as follows: salaries and wages, $34,000 per month: advertising, Depreciation, ind ing 5% of sales, other expenses. 3% of sales. quarter f Each months ending inventory should equal 25% of the following month's cost of goods sold g. One-half of a h. During February, the company will purchase a new copy machine for $2.,900 cash. During March, other L During January, the company will declare and pay $45,000 in cash dividends. month's inventory purchases is paid for in the month of purchase; the other half is paid in the following month equipment will be purchased for cash at a cost of $79,500. j. Management wants to maintain a minimum cash balance of S30,000. The has anExplanation / Answer
1) Schedule of expected cash flows (Amount in $)
80,800
(404,000*20%)
120,200
(601,000*20%)
63,200
(316,000*20%)
215,200
(269,000*80%)
323,200
(404,000*80%)
480,800
(601,000*80%)
2-a) Merchandise Purchases Budget (Amount in $)
242,400
(404,000*60%)
360,600
(601,000*60%)
189,600
(316,000*60%)
90,150
(360,600*25%)
47,400
(189,600*25%)
31,800
[(212,000*60%)*25%]
60,600
(242,400*25%)
2-b) Schedule of expected cash disbursements for merchandise purchases (Amount in $)
3) Cash Budget (Amount in $)
128,320
[(5%+3%)of 404,000]+34,000+62,000
144,080
[(5%+3%)of 601,000]+34,000+62,000
121,280
[(5%+3%)of 316,000]+34,000+62,000
4) Absorption Costing Income statement for the Quarter ending March 31 (Amount in $)
Particulars January February March Quarter Cash sales (20% of current month sales)80,800
(404,000*20%)
120,200
(601,000*20%)
63,200
(316,000*20%)
264,200 Credit sales (80% of last month sales)215,200
(269,000*80%)
323,200
(404,000*80%)
480,800
(601,000*80%)
1,019,200 Total Collections 296,000 443,400 544,000 1,283,400Related Questions
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