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: Debits $ 52,000 209,600 59,550 362,000 Cash Accounts receivable Inventory Buildings and equipment (net) Accounts payable Common stock Retained earnings March April 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. j. Management wants to maintain a minimum cash balance of $30,000. The company has an agreement with a local bank allowing it
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: Debits $ 52,000 209,600 59,550 362,000 Cash Accounts receivable Inventory Buildings and equipment (net) Accounts payable Common stock Retained earnings March April 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. j. Management wants to maintain a minimum cash balance of $30,000. The company has an agreement with a local bank allowing it
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter8: Budgeting
Section: Chapter Questions
Problem 4PB
Related questions
Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
ASAP COMPLETE ALL THE REQUIREMENT
Transcribed Image Text:-ыну сыны
j. Management wants to maintain a minimum cash balance of $30,000. The company has an agreement with a local bank allowing it
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 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.
נייטקיי~~
Required:
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.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2A Required 2B Required 3 Required 4 Required 5
Complete the schedule of expected cash disbursements for merchandise purchases.
Schedule of Expected Cash Disbursements for Merchandise Purchases
February March
December purchases
January purchases
February purchases
March purchases
Total cash disbursements for purchases
Quarter
$ 88,725
267,750
156,750
313,500
84,675
84,675
$ 222,600 $ 290,625 $ 241,425 $ 754,650
January
88,725
133,875
Required 2A
133,875
156,750
Required 3
>
Transcribed Image Text: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
December (actual)
January
February
March
April
Debits
$ 52,000
209,600
59,550
362,000
b. Actual sales for December and budgeted sales for the next four months are as follows:
$ 262,000
$ 397,000
$ 594,000
$ 308,000
$ 205,000
Credits
$ 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.
j. Management wants to maintain a minimum cash balance of $30,000. The company has an agreement with a local bank allowing it
TI
401
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning