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Cash Budget Problem - Intro Hillyard Company, an office supplies specially to prepares its master budget on a quarterly basis. The following data have been assembled to in preparing the master budget for the first quarter Balance Sheet, Purlod Ending December 31, 2018 Cash S48,000 Accounts Payable $95.000 Accounts Receivable $224,000 Working Capital Line 50 Inventory 560,000 Accrued tables S0 19&E $670,000 Common Stock $500,000 Accum Depr$100.000 Retained Earnings $109,000 Total Assets $702,000 Total Lab & Equity 702,000 Sales December 2018 (Actual) $280,000 January 2019 - Forecast $400,000 February 2019 - Forecast $600,000 March 2019 - Forecast $300,000 April 2019 - Forecast $200,000 . . After lengthy conversations with the various department managers, the following assumptions were made for the upcoming quarter: Sales to customers are 20% for cash and 8 placed on credit All credit sales are fully collected in the month following the sale. 100% of the December 31 Accounts Receivable are from December credit sales. The company's expected gross margin on sales for the quarter is 40%, each month. Monthly expenses are forecasted as follows Salaries expense is $27,000 per month Advertising expense is 570,000 per month o Shipping costs is 5% of sales Other Administrative expenses is 3% of sales Depreciation is $14,000 per month Each month's ending inventory should equal 25% of the following month's cost of goods sold Of the inventories purchased, 50% is paid for in the month it is purchased and the other 50% is paid for in the following month December Accounts Payable is fully paid in January . During February, the company will purchase (for cash) a new copy machine for $1,700. During March, other equipment will be purchased at a cost of $84,500 (for cash). During January, the company will declare and pay cash dividends totaling $45,000 The CFO wants to maintain a minimum cash balance of 530,000 at the end of each month, beginning at the end of lanuary The company has an agreement with the bank that allows borrowings in increments of $1,000. Any anticipated borrowings are taken out at the beginning of the month Interest on borrowings is 1% per month; interest is not compounded At the end of the month, any excess cash is used to pay outstanding borrowings and interest owed. REQUIRED . . . . . . A Prepare a cash budget for the months of Jan Feb and March 2019 B. Prepare a Proforma Balance Sheet as of March 31, 2019 Prepare of Proforma Income Statement for the first quarter months) ending March 31, 2019

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