Redo the requirements please all of them!!… ### Educational Content: Budgeting and Financial Planning#### Scenario OverviewA company is preparing its financial plan for the first quarter of the year. The following requirements must be fulfilled using the given data:1. **Schedule of Expected Cash Collections**2. **Merchandise Purchases Budget** - 2-a. Prepare and analyze the merchandise purchases budget. - 2-b. Schedule expected cash disbursements for merchandise purchases.3. **Cash Budget**4. **Absorption Costing Income Statement** for the quarter ending March 31.5. **Balance Sheet Preparation** as of March 31.#### Key Financial Information- **January Cash Event**: The company will declare and pay $45,000 in cash dividends.- **Cash Management**: The company wishes to maintain a minimum cash balance of $30,000. They have an agreement with a bank for borrowing in increments of $1,000 with a 1% interest rate per month. Interest is not compounded, with repayment as soon as possible.#### Merchandise Purchases BudgetThe table below summarizes the budgeted plans for inventory management over the first quarter.| Month | Budgeted Cost of Goods Sold | Add Desired Ending Inventory | Total Needs | Less Beginning Inventory | |------------|-----------------------------|------------------------------|-------------|--------------------------|| January | $238,200 | 89,100 | 327,300 | 59,550 || February | $356,400 | 46,200 | 402,600 | 89,100 || March | $184,800 | 30,750 | 215,550 | 46,200 || **Quarter**| **$779,400** | **30,750** | **810,150** | **135,300** |- **Budgeted Cost of Goods Sold**: Represents the planned expense for goods sold each month.- **Desired Ending Inventory**: This is the projected inventory required at the end of each month to prepare for future sales.- **Total Needs**: The total inventory needs calculated by adding the budgeted cost of goods sold to the desired ending inventory.- **Less Beginning Inventory**: The expected inventory at the start of each month, subtracted to determine net purchases needed.This budget helps in planning the procurement of merchandise effectively, ensuring cash flow and **Hillyard Company: Master Budget Preparation for the First Quarter**Hillyard Company, a specialty office supplies store, collected the following data for its master budget preparation for the upcoming first quarter:**a. General Ledger Account Balances as of December 31:**- **Debits:** - Cash: $52,000 - Accounts Receivable: $209,600 - Inventory: $59,550 - Buildings and Equipment (Net): $362,000- **Credits:** - Accounts Payable: $88,725 - Common Stock: $500,000 - Retained Earnings: $94,425**Total Debits and Credits: $683,150****b. Actual and Budgeted Sales:**- December (Actual): $262,000- January: $397,000- February: $594,000- March: $308,000- April: $205,000**c. Sales Information:**- 20% of sales are cash sales, and 80% are on credit.- Credit sales are collected in the month following the sale.- Accounts receivable at December 31 are from December credit sales.**d. Gross Margin and Cost of Goods:**- Gross margin is 40% of sales.- Cost of goods sold is 60% of sales.**e. Monthly Expense Budget:**- Salaries and Wages: $27,000 per month- Advertising: $67,000 per month- Shipping: 5% of sales- Other Expenses: 3% of sales- Depreciation (including new asset depreciation for the quarter): $44,020**f. Inventory and Purchases:**- Ending inventory should be 25% of the subsequent month’s cost of goods sold.- Half of the inventory purchase cost is paid in the purchase month, the rest is paid the following month.**g. Equipment Purchases:**- February: New copy machine for $2,200 (cash purchase).- March: Additional equipment worth $76,000 (cash purchase).**h. Dividends:**- January: Declare and pay $45,000 in cash dividends.**i. Cash Management:**- Maintain a minimum cash balance of $30,000.- An agreement exists with a local bank for necessary cash management.This information forms

Budgeting is the process of estimating future operations based on past performance. % are estimated…

Hillyard Company, an office supplies specialty store, gathered the following information to prepare its master budget for the first quarter of the year: 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 March April Debits $ 52,000 209,600 59,550 362,000 A Credits b. Actual sales for December and budgeted sales for the next four months are as follows: December (actual) January February $ 262,000 $ 397,000 $ 594,000 $308,000 $ 205,000 $ 88,725 500,000 94,425 $ 683,150 $ 683,150 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. (In other words, cost of goods sold is 60% of sales.) e. Monthly expenses are budgeted as follows: salaries and wages, $27,000 per month; advertising, $67,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $44,020 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 $2,200 cash. During March, other equipment will be purchased for cash at a cost of $76,000. i. During January, the company will declare and pay $45,000 in cash dividends. i. Management wants to maintain a minimum cash balance of $30.000. The company has an agreement with a local bank allowing it

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q