2 Problem 20-BAA (Algo) Merchandising: Preparation of a complete master budget LO P4 Dimsdale Sports, a merchandising company, reports the following balance sheet at December 31 DINSDALE SPORTS COMPANY Balance Sneet 50 Cash Assets December 31 Inventory Equipment Total assets Accounts receivable Less Accumulated depreciation i Liabilities and Equity 1 21,000 520,000 95,000 $600,000 25,000 525,000 $1,161,000 Liabilities Accounts payable $340,000 Laan payable Taxes payable (due March 15) 14,000 91,000 445,000 Equity Common stock 1472,500 Retained earnings 243,500 Total liabilities and equity 716,000 $1,161,000 To prepare a master budget for January, February, and March, use the following information a. The company's single product is purchased for $20 per unit and resold for $59 per unit. The inventory level of 4,750 units on December 31 is more than management's desired level, which is 20% of the next month's budgeted sales units, Budgeted sales are January, 7,500 units; February, 8,750 units: March, 10,750 units; and April, 10,000 units. All sales are on credit. b. Cash receipts from sales are budgeted as follows: January, $252.750, February, $743,823, March, $531,517 c. Cash payments for merchandise purchases are budgeted as follows: January, $60,000: February. $298,000; March, $108,600. d. Sales commissions equal to 20% of sales dollars are paid each month. Sales salaries (excluding commissions) are $7,000 per month e. General and administrative salaries are $12,000 per month. Maintenance expense equals $2,000 per month and is paid in cash. New equipment purchases are budgeted as follows: January, $31,200, February, $91,200; and March, $21,600. Budgeted depreciation expense is January, $ 6.575; February, $7,525; and March, $7,750, g. The company budgets a land purchase at the end of March at a cost of $170,000, which will be paid with cash on the last day of the month