*Please show work on how you got the answer for any calclualtions in Income Statemnet and the Balance sheet. (Also I could not fit the entire Balance sheet chart on it, so it is suppose to be longer)

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 companys general ledger showed the following account balances:

cash	64000
Accounts Receivable	219,200
Inventory	61,350
Buildings and equipment (net)	374,000
Accounts Payable		92,325
Common Stock		500,000
Retained Earnings		126,225
	718550	718550

b.

Actual sales for December and budgeted sales for the next four months are as follows:

December (actual)	274,000
January	409,000
February	606,000
March	321,000
April	217,000

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 companys 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, $39,000 per month: advertising, $57,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $45,940 for the quarter.
f.	Each months ending inventory should equal 25% of the following months cost of goods sold.
g.	One-half of a months 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 $3,400 cash. During March, other equipment will be purchased for cash at a cost of $82,000.
i.	During January, the company will declare and pay $45,000 in cash dividends.
j.	Management wants to maintain a minimum cash balance of $30,000. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.

Using the data above, complete the following statements and schedules for the first quarter:

1.

2-b.

Schedule of expected cash disbursements for merchandise purchases:

Schedule of Expected Cash disbursements
	January	February	March	Quarter
December purchases	93,325	0	0	92,325
January purchases	137,475	137,475	0	274,950
February purchases		160,425	160,425	320,850
March Purchases		0	88,500	88,500
Total cash disbursements for purchases	229,800	297,900	248,925	776,625

3.

Cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.)

Cash Budget
	January	February	March	Quarter
Beg Cash balance	64,000	30,480	33,100	64,000
Add cash collections	301,000	448,400	549,000	1,298,400
Total Cash available	365,000	478,880	582,100	1,362,400
Less cash disbursements
Purchase of inventory	229,800	297,900	248,925	776,625
Selling and administrative expense	128,720	144,480	121,680	394,880
Purchase of equipment		3,400	82,000	85,400
Cash dividends	45,000	0	0	45,000
Total cash disbursements	403,520	445,780	452,605	1,301,905
Excess (deficiency) of cash	(38,520)	33,100	129,495	60,495
Financing:
Borrowings	69,000	0	0	69,000
Repayments	0	0	(69,000)	(69,000)
Interest	0	0	(2,070)	(2,070)
Total financing	69,000		(71,070)	(2,070)
Ending cash balance	30,480	33,100	58,425	58,425

4.

Prepare an absorption costing income statement for the quarter ending March 31.

Income Statement
For the Quarter Ended March 31
Sales
Cost of Goods sold:
Gross Margin
Selling and administrative expenses:
Salaries and wages
Advertising
Shipping
Other expenses
Net Operating income
interest expense
Net Icome

5. Prepare a balance sheet as of March 31

Balance sheet
March 31
Assets
Current assets
Total Current assets
Current Liabilities
Stockholder's Equity
Total liablilites and stockholders equity