Problem 8-31 (Algo) Completing a Master Budget [LO8-2, LO8-4, LO8-7, LO8-8, LO8-9, LO8-10] Hityard Company, an office supplies speciaity store, prepares its master budget on a quarterly basis. The following dara have been assembled to assist in preparing the master budget for the first quarter: a. As of December 31 (the end of the prior quarter), the company's general ledger showed the following account balances: b. Actual sales for December and budgeted sales for the next four months are as follows: c. Sales are 20% for cash and 80% on credit. All poyments on ciedit 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 soid is 60% of sales) e. Monthly expenses are budgeted as follows: salaries and wages, 332.000 per month: advertising. 364.000 per month, shipping. 5% of cales; other expenses. 3% of sales. Depreciation, including depreciation on new assets acquired during the cuarter, will be $44,820 for the quarter. f. Each month's ending inventory should equal 25% of the following month's cost of goods sold. 9. One-half of a month's inventory purchases is paid for in the month of purchese; the other haif is paid in the following month h. During February, the company will purchase a new copy mochine for $2,700 cash. During March, other equipment will be purchased for cash at a cost of $78,500 1. During January, the company will declare and pay $45.000 in cash dividends 1. Manggement wants to maintain a minimum cash balance of $30.000 the company has an agreement with a local bank that allows the company to borrow in increments of 51.000 ot the beginning of each month. The interest rate on these loans is 118 per month and for simpicity we will assume that interest is not compounded. The compary would, as far as it is able, repay the loan plus accumulated interest at the end of the quanter. 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 6. Prepare a bolance sheet as of March 3t