- 45 Hillyard Company An Office Supplies Specialty Store Prepares Its Master Budget On A Quarterly Basis The Following 1 (73.63 KiB) Viewed 16 times
- 45 Hillyard Company An Office Supplies Specialty Store Prepares Its Master Budget On A Quarterly Basis The Following 2 (113.82 KiB) Viewed 16 times
- 45 Hillyard Company An Office Supplies Specialty Store Prepares Its Master Budget On A Quarterly Basis The Following 3 (95.72 KiB) Viewed 16 times
- 45 Hillyard Company An Office Supplies Specialty Store Prepares Its Master Budget On A Quarterly Basis The Following 4 (74.54 KiB) Viewed 16 times
- 45 Hillyard Company An Office Supplies Specialty Store Prepares Its Master Budget On A Quarterly Basis The Following 5 (86.4 KiB) Viewed 16 times
b. Actual sales for December and budgeted sales for the next four months are as follows: December(actual) $262,000 $397,000 $594,000 $308,000 $205,000 January February March April 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. 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. 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.
14 Required: Using the data above, complete the following statements and schedules for the first quarter: 1. Schedule of expected cash collections: Cash sales Credit sales Total collections Schedule of Expected Cash Collections January February March $ 79,400 209,600 $ 289,000 $ 0 $ Check Figure: Total Cash Collections for the Quarter 2-a. Merchandise purchases budget: Quarter $ 79,400 209,600 0 $289,000 $1,262,200 Merchandise Purchases Budget January February 238,200 $ 356,400 Budgeted cost of goods sold Add desired ending inventory Total needs Less beginning inventory Required purchases March 356,400 89,1001 327,300 59,550 $ 267,750 $ 356,400 0 $ Check Figure: Total Merchandise Purchases for the Quarter $750,600 + Quarter 0 0
*$397,000 sales x 60% cost ratio = $238,200. +$356,400 x 25% = $89,100. 2-b. Schedule of expected cash disbursements for merchandise purchase. Schedule of Expected Cash Disbursements for Merchandise Purchases January February March $ 88,725 December purchases January purchases February purchases March purchases Total cash disbursements for purchases 133,875 133,875 $ 222,600 $ 133,875 $ Check Figure: Total Quarterly Cash Disbursements for Merchandise 10 Quarter $ 88,725 267,750 0 0 $ 356,475 $ 754,650
3. Cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Beginning cash balance Add cash collections Total cash available Less cash disbursements: Purchases of inventory Selling and administrative expenses Purchases of equipment Cash dividends Total cash disbursements Excess (deficiency) of cash Financing: Borrowings Repayments Interest Total financing Ending cash balance Hillyard Company Cash Budget January $ 52,000 289,000 341,000 $ Check Figure for January $ 222,600 125,760 45,000 393,360 (52,360) 0 (52,360) $ 30,640 February 0 0 0 March 0 0 0 0 0 0 $ $ Check Figure for the Quarter $ Quarter 0 0 0 0 0 47,940