Hancock Company, a merchandising company, prepares its masterbudget on a quarterly basis. The following data have been assembledto assist in preparation of the master budget for the secondquarter.

a.	As of December 31 (the end of the prior quarter), the company’sbalance sheet showed the following account balances:

Cash	$	13,100
Accounts receivable		55,800
Inventory		18,620
Buildings and equipment (net)		135,000
Accounts payable			$	47,000
Common stock				115,000
Retained earnings				60,520
	$	222,520	$	222,520

b.	Actual and budgeted sales are as follows:

December(actual)	$ 93,000
January	$ 133,000
February	$ 194,000
March	$ 102,000
April	$ 100,000

c.	Sales are 40% for cash and 60% on credit. All payments on creditsales are collected in the month following the sale. The accountsreceivable at December 31 are a result of December creditsales.
d.	The company's gross margin percentage is 30% of sales. (Inother words, cost of goods sold is 70% of sales.)
e.	Each month's ending inventory should equal 20% of the followingmonth's budgeted cost of goods sold.
f.	One-quarter of a month's inventory purchases is paid for in themonth of purchase; the other three- quarters is paid for in thefollowing month. The accounts payable at December 31 are the resultof December purchases of inventory.
g.	Monthly expenses are as follows: commissions, $27,500; rent,$4,150; other expenses (excluding depreciation), 8% of sales.Assume that these expenses are paid monthly. Depreciation is $4,050for the quarter and includes depreciation on new assets acquiredduring the quarter.
h.	Equipment will be acquired for cash: $5,330 in January and$9,600 in February.
i.	Management would like to maintain a minimum cash balance of$7,000 at the end of each month. The company has an agreement witha local bank that allows the company to borrow in increments of$1,000 at the beginning of each month, up to a total loan balanceof $50,000. The interest rate on these loans is 1% per month, andfor simplicity, we will assume that interest is not compounded. Thecompany would, as far as it is able, repay the loan plusaccumulated interest at the end of the quarter.

Required:
Using the data above, complete the followingstatements and schedules for the second quarter:
1.	Schedule of expected cash collections:

               

2a.	Merchandise purchases budget.

     

         

2b.	Schedule of expected cash disbursements for merchandisepurchases:

*Beginning balance of the accounts payable.

3.	Schedule of expected cash disbursements for selling andadministrative expenses:

4.	Cash budget. (Cash deficiency, repayments and interestshould be indicated by a minus sign.)

5.	Prepare an absorption costing income statement for the quarterending March 31. (Losses should be indicated by a minussign.)

6.	Prepare a balance sheet as of March 31.(Round youranswers to the nearest whole number.)