Chapter #8 - Quiz i Saved Help Save & Exit Submit 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: eBook Debits Credits Cash $ 45, 000 Accounts receivable 204, 000 Inventory 58 , 500 Buildings and equipment (net) 355 , 000 Accounts payable $ 86, 625 Common stock 500, 000 Retained earnings 75, 875 662, 500 $ 662, 500 b. Actual sales for December and budgeted sales for the next four months are as follows: December ( actual) $ 255 , 000 January $ 390, 000 February $ 587, 000 March $ 301, 000 April $ 198, 000 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, $20,000 per month: advertising, $60,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $42,900 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 $1,500 cash. During March, other equipment will be purchased