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Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data 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 balance Cash Accounts receivable Inventory Buildings and equipment (net) Accounts payable Common stock Retained earnings $ 47,000 205,600 58,800 357,000 $ 87,225 500,000 81,175 $ 668,400 $ 668,400 b. Actual sales for December and budgeted sales for the next four months are as follows: December(actual) January February March April $ 257,000 $ 392,000 $ 589,000 $303,000 $ 200,000 C. Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The acco receivable at December 31 are a result of December 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 budgeted as follows: salaries and wages, $22,000 per month: advertising, $62,000 per month; ship of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will E $43,220 for the quarter. f. Each month's ending inventory should equal 25% of the following month's cost of goods sold. g. One-half of a month's inventory purchases is paid for in the month of purchase; the other half is paid in the following month. h. During February, the company will purchase a new copy machine for $1,700 cash. During March, other equipment will be pu for cash at a cost of $73,500. d vidondr

Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data 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 balance Cash Accounts receivable Inventory Buildings and equipment (net) Accounts payable Common stock Retained earnings $ 47,000 205,600 58,800 357,000 $ 87,225 500,000 81,175 $ 668,400 $ 668,400 b. Actual sales for December and budgeted sales for the next four months are as follows: December(actual) January February March April $ 257,000 $ 392,000 $ 589,000 $303,000 $ 200,000 C. Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The acco receivable at December 31 are a result of December 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 budgeted as follows: salaries and wages, $22,000 per month: advertising, $62,000 per month; ship of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will E $43,220 for the quarter. f. Each month's ending inventory should equal 25% of the following month's cost of goods sold. g. One-half of a month's inventory purchases is paid for in the month of purchase; the other half is paid in the following month. h. During February, the company will purchase a new copy machine for $1,700 cash. During March, other equipment will be pu for cash at a cost of $73,500. d vidondr

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Transcript for Educational Website:** ### Hillyard Company Master Budget Preparation Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data has been assembled to assist in preparing the master budget for the first quarter: #### a. Account Balances as of December 31 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:** $87,000 - **Inventory:** $205,600 - **Buildings and Equipment (net):** $357,000 - **Accounts Payable:** $81,175 - **Common Stock:** $87,225 - **Retained Earnings:** $500,000 **Total Assets = Total Liabilities and Equity:** $668,400 #### b. Sales Data Actual sales for December and budgeted sales for the next four months are as follows: - **December (actual):** $257,000 - **January:** $392,000 - **February:** $589,000 - **March:** $303,000 - **April:** $200,000 #### c. Sales Collection Sales are allocated as 20% for cash and 80% on credit. All payments on credit sales are collected in the month following the sale. The accounts receivable at December 31 are a result of December credit sales. #### d. Company's Gross Margin The company’s gross margin is 40% of sales (i.e., the cost of goods sold is 60% of sales). #### e. Monthly Expenses Monthly expenses are budgeted as follows: - **Salaries and Wages:** $22,000 per month - **Advertising:** $62,000 per month - **Shipping:** 5% of sales - **Other Expenses:** 3% of sales Depreciation, including depreciation on new assets acquired during the quarter, will be $43,220 for the quarter. #### f. Inventory Policy Each month’s ending inventory should equal 25% of the following month’s cost of goods sold. #### g. Inventory Purchases - One-half of a month’s inventory purchase is paid for in the month of purchase; the other half is paid in the following month. #### h. Equipment Purchases - **February:** The company will purchase a
Transcribed Image Text:**Transcript for Educational Website:** ### Hillyard Company Master Budget Preparation Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data has been assembled to assist in preparing the master budget for the first quarter: #### a. Account Balances as of December 31 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:** $87,000 - **Inventory:** $205,600 - **Buildings and Equipment (net):** $357,000 - **Accounts Payable:** $81,175 - **Common Stock:** $87,225 - **Retained Earnings:** $500,000 **Total Assets = Total Liabilities and Equity:** $668,400 #### b. Sales Data Actual sales for December and budgeted sales for the next four months are as follows: - **December (actual):** $257,000 - **January:** $392,000 - **February:** $589,000 - **March:** $303,000 - **April:** $200,000 #### c. Sales Collection Sales are allocated as 20% for cash and 80% on credit. All payments on credit sales are collected in the month following the sale. The accounts receivable at December 31 are a result of December credit sales. #### d. Company's Gross Margin The company’s gross margin is 40% of sales (i.e., the cost of goods sold is 60% of sales). #### e. Monthly Expenses Monthly expenses are budgeted as follows: - **Salaries and Wages:** $22,000 per month - **Advertising:** $62,000 per month - **Shipping:** 5% of sales - **Other Expenses:** 3% of sales Depreciation, including depreciation on new assets acquired during the quarter, will be $43,220 for the quarter. #### f. Inventory Policy Each month’s ending inventory should equal 25% of the following month’s cost of goods sold. #### g. Inventory Purchases - One-half of a month’s inventory purchase is paid for in the month of purchase; the other half is paid in the following month. #### h. Equipment Purchases - **February:** The company will purchase a
**Exercise:** Using the data above, complete the following statements and schedules for the first quarter: 1. Schedule of expected cash collections. 2-a. Merchandise purchases budget. 2-b. Schedule of expected cash disbursements for merchandise purchases. 3. Cash budget. 4. Prepare an absorption costing income statement for the quarter ending March 31. 5. Prepare a balance sheet as of March 31. **Instructions:** Complete this question by entering your answers in the tabs below. - Required 1 - Required 2A - Required 2B - Required 3 - Required 4 - Required 5 **Cash Budget:** (Cash deficiency, repayments, and interest should be indicated by a minus sign.) **Hillyard Company** Cash Budget | | January | February | March | Quarter | |----------------------|---------|----------|-------|---------| | **Beginning cash balance** | $47,000 | | | | | Add collections from customers | 284,000 | | | | | **Total cash available** | 331,000 | | | | | **Less cash disbursements:** | | | | | | Inventory purchases | 219,600 | | | | | Selling and administrative expenses | 115,360 | | | | | Equipment purchases | | | | | | Cash dividends | 45,000 | | | | | **Total cash disbursements** | 379,960 | | | | | **Excess (deficiency) of cash** | (48,960) | | | | This table displays the cash budget for Hillyard Company, detailing cash collections, disbursements, and the resulting cash excess or deficiency for January. The table will need to be completed for February, March, and the entire quarter.
Transcribed Image Text:**Exercise:** Using the data above, complete the following statements and schedules for the first quarter: 1. Schedule of expected cash collections. 2-a. Merchandise purchases budget. 2-b. Schedule of expected cash disbursements for merchandise purchases. 3. Cash budget. 4. Prepare an absorption costing income statement for the quarter ending March 31. 5. Prepare a balance sheet as of March 31. **Instructions:** Complete this question by entering your answers in the tabs below. - Required 1 - Required 2A - Required 2B - Required 3 - Required 4 - Required 5 **Cash Budget:** (Cash deficiency, repayments, and interest should be indicated by a minus sign.) **Hillyard Company** Cash Budget | | January | February | March | Quarter | |----------------------|---------|----------|-------|---------| | **Beginning cash balance** | $47,000 | | | | | Add collections from customers | 284,000 | | | | | **Total cash available** | 331,000 | | | | | **Less cash disbursements:** | | | | | | Inventory purchases | 219,600 | | | | | Selling and administrative expenses | 115,360 | | | | | Equipment purchases | | | | | | Cash dividends | 45,000 | | | | | **Total cash disbursements** | 379,960 | | | | | **Excess (deficiency) of cash** | (48,960) | | | | This table displays the cash budget for Hillyard Company, detailing cash collections, disbursements, and the resulting cash excess or deficiency for January. The table will need to be completed for February, March, and the entire quarter.
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