Answer:
Hillyard Company
1. Schedule of expected cash collections:
January February March April
December(actual) $ 280,000
January $ 400,000 80,000 $320,000
February $ 600,000 120,000 $480,000
March $ 300,000 60,000 $240,000
April $ 200,000 40,000
Total $360,000 $440,000 $540,000
2-a. Merchandise purchases budget:
January February March
Cost of goods sold 240,000 360,000 180,000
Ending Inventory 90,000 45,000 30,000
Goods available 330,000 405,000 210,000
Opening Inventory (60,000) (90,000) (45,000)
Purchases $270,000 $315,000 $165,000
2-b. Schedule of expected cash disbursements for merchandise purchases:
Budgeted Purchases Disbursement:
January February March April
December(actual) $ 93,000
January $270,000 135,000 $ 135,000
February $315,000 157,500 $ 157,500
March $165,000 82,500 $ 82,500
Total $228,000 $292,500 $240,000
3. Cash budget:
January February March Total
Beginning balance $48,000 $30,000 $30,800 $48,000
Cash collections 360,000 440,000 540,000 1,340,000
Total $408,000 $470,000 $570,800 $1,388,000
Disbursements:
Purchases 228,000 292,500 240,000 (760,500)
Salaries & wages 27,000 27,000 27,000 (81,000)
Advertising 70,000 70,000 70,000 (210,000)
Shipping (5% sales) 20,000 30,000 15,000 (65,000)
Other Expense 3% 12,000 18,000 9,000 (39,000)
Equipment 1,700 84,500 (86,200)
Dividend 45,000 (45,000)
Total disbursement $402,000 $439,200 $445,500 (1,286,700)
Loan + Interest 24,000 24,720 ( 720)
Ending balance 6,000 30,800 100,580 100,580
Required
Minimum cash bal. 30,000 30,000 30,000
Interest on loan = $720 ($24,000 x 1% x 3)
4. Prepare an absorption costing income statement for the quarter ending March 31:
Sales $1,300,000
Cost of goods sold 780,000
Gross profit $520,000
Expenses:
Salaries & Wages 81,000
Advertising 210,000
Shipping expense 65,000
Other expenses 39,000
Depreciation 42,000
Interest expense 720 (437,720)
Net Income 82,280
5. Prepare a balance sheet as of March 31:
Assets:
Cash $100,580
Accounts Receivable 240,000
Inventory 30,000
Buildings & Equipment 414,200
Total Assets $
Liabilities + Equity:
Accounts Payable $82,500
Common Stock 500,000
Retained Earnings 146,280
Total $
Explanation:
a) Data:
General Ledger Balances:
Debits Credits
Cash $ 48,000
Accounts receivable 224,000
Inventory 60,000
Buildings and equipment (net) 370,000
Accounts payable $ 93,000
Common stock 500,000
Retained earnings 109,000
$ 702,000 $ 702,000
b) Budgeted Cash Collections
January February March April
December(actual) $ 280,000
January $ 400,000 80,000 $320,000
February $ 600,000 120,000 $480,000
March $ 300,000 60,000 $240,000
April $ 200,000 40,000
Total $360,000 $440,000 $540,000
Ending Accounts Receivable balance = $240,000
c) Cost of goods sold
January February March Total
Sales $400,000 $600,000 $300,000 $1,300,000
Shipping costs 5% 20,000 30,000 15,000 65,000
Other Expense 3% 12,000 18,000 9,000 39,000
Depreciation 42,000
Cost of goods sold 240,000 360,000 180,000 780,000
Ending Inventory 90,000 45,000 30,000
Goods available 330,000 405,000 210,000
Opening Inventory (60,000) (90,000) (45,000)
Purchases 270,000 315,000 165,000
b) Budgeted Purchases Disbursement:
January February March April
December(actual) $ 93,000
January $270,000 135,000 $ 135,000
February $315,000 157,500 $ 157,500
March $165,000 82,500 $ 82,500
Ending Accounts Payable balance = $82,500
c) Retained Earnings:
Beginning $109,000
Net Income 82,280
Dividends (45,000)
Ending $146,280
d) Buildings & Equipment 370,000
New additions: 86,200
Less Depreciation expense (42,000)
Balance, net $414,200