Hancock Company, a merchandising company, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparation of the master budget for the second quarter a. As of December 31 (the end of the prior quarter), the companys balance sheet showed the following account balances: Cash $10,500 Accounts Receivable 54,000 Inventory 16,800 Buildings and equiptment (net) 132,000 Accounts payable 44,000 Common stock 112,000 Retained earnings 57,3000 213,300 213,300 b. Actual budgeted sales were as follows: December (actual) $90,000 January 120,000 February 200,000 March 67,000 April 256,000 c. Sales are 40% for cash and 60% on credit. All payments on credit sales are collected in the month following the sale. The accounts receivable at December 31 are a result of December credit sales d. The company's gross margin percentage is 30% of sales. (In other words, cost of goods sold is 70% of sales.) e. Each month's ending inventory should equal 20% of the following month's budgeted cost of goods sold. f. One-quarter of a month's inventory purchases is paid for in the month of purchase; the other three- quarters is paid for in the following month. The accounts payable at December 31 are the result of December purchases of inventory. g. Monthly expenses are as follows: commissions, $24,500; rent, $3,850; other expenses (excluding depreciation), 8% of sales. Assume that these expenses are paid monthly. Depreciation is $3,750 for the quarter and includes depreciation on new assets acquired during the quarter. h. Equipment will be acquired for cash: $5,030 in January and $9,300 in February. i. Management would like to maintain a minimum cash balance of $3,000 at the end of each month. 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, up to a total loan balance of $50,000. 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 second quarter 5. Prepare an absorption costing income statement for the quarter ending March 31. (Losses should be indicated by a minus sign.) For the Quarter Ending March 31 Cost of Goods sold Selling and administrative expenses Net income (loss) 6. Prepare a balance sheet as of March 31. (Round answers to nearest whole number) Assets Assets As of March 31 Current assets Total Current Assets Total assets Liability and Stockholder's equity As of March 31 Current liabilties Stockholder's equity Total liabilties and stockholders' equity