20.12
Near the end of 2019 , the management of Dimsdale Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2019. To prepare a master budget for January, February, and March of 2020, management gathers the following Information. a. The company's single product is purchased for $30 per unit and resold for $57 per unit. The expected Inventory level of 4,750 units on December 31,2019 , is more than management's desired level, which is 20% of the next month's expected sales (In units). Expected sales are January, 7,000 units; February, 9,000 units; March, 10,750 units; and Aprll, 9,500 units. b. Cash sales and credit sales represent 20% and 80%, respectively, of total sales. Of the credit sales, 63% is collected in the first month after the month of sale and 37% In the second month after the month of sale. For the December 31,2019 , accounts recelvable balance, $130,000 is collected in January 2020 and the remaining $390,000 is collected in February 2020. c. Merchandise purchases are pald for as follows: 20% in the first month after the month of purchase and 80% in the second month after the month of purchase. For the December 31, 2019, accounts payable balance, $65,000 is paid in January 2020 and the remaining $285,000 is pald in February 2020 . d. Sales commissions equal to 20% of sales are pald each month. Sales salarles (excluding commissions) are $60,000 per year. e. General and administrative salarles are $144,000 per year. Maintenance expense equals $2,200 per month and is pald In cash. f. Equipment reported In the December 31, 2019, balance sheet was purchased In January 2019. It is being depreciated over eight years under the straight-line method with no salvage value. The following amounts for new equipment purchases are planned in the coming quarter: January, $40,800; February, $96,000; and March, $28,800. This equipment will be depreclated under the straightIne method over elght years with no salvage value. A full month's depreclation is taken for the month in which equipment is purchased. g. The company plans to buy land at the end of March at a cost of $170,000, which will be paid with cash on the last day of the month. h. The company has a working arrangement with Its bank to obtain additional loans as needed. The Interest rate is 12% per year, and Interest is paid at each month-end based on the beginning balance. Partlal or full payments on these loans can be made on the last day of the month. The company has agreed to maintain a minimum ending cash balance of $26,000 at the end of each month. I. The Income tax rate for the company is 37%. Income taxes on the first quarter's income will not be pald until April 15. Requlred: Prepare a master budget for each of the first three months of 2020 ; Include the following component budgets. 1. Monthly sales budgets. 2. Monthly merchandise purchases budgets. 3. Monthly selling expense budgets. 4. Monthly general and administratlve expense budgets. 5. Monthly capital expenditures budgets. 6. Monthly cash budgets. 7. Budgeted Income statement for the entire first quarter (not for each month). 8. Budgeted balance sheet as of March 31, 2020. Monthly sales budgets. Monthly merchandise purchases budgets. Monthly selling expense budgets. Monthly general and administrative expense budgets. Monthly capital expenditures budgets. Calculate the budgeted cash receipts and cash payments. (Negative values should be indicated with minus sign. Round your final answers to the nearest whole dollar.) Calmullatinn nf rooh ramainto frnm muotrmaro. \begin{tabular}{|l|l|l|l|l|} \hline \multicolumn{4}{|c|}{ Total cash receipts from customers } \\ \hline & & January & February & March \\ \hline Collections of receivables & & & \\ \hline & & & & \\ \hline & & & & \\ \hline \end{tabular} Calculation of payments for merchandise: \begin{tabular}{|l|l|l|l|l|} \hline & & \multicolumn{2}{|c|}{ January } & February \\ \hline Desired ending inventory (units) & & & & \\ \hline Budgeted sales in units & & & & \\ \hline Total units required & & & & \\ \hline Beginning inventory (units) & & & & \\ \hline Number of units to be purchased & & & & \\ \hline Cost per unit & & & & \\ \hline Total cost of purchases & & & & \\ \hline \end{tabular} Monthly cash budgets. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar.) \begin{tabular}{|l|l|l|l|} \hline \multicolumn{3}{|c|}{ Loan balance } \\ \hline & January & February & March \\ \hline Loan balance - Beginning of month & & & \\ \hline Additional loan (loan repayment) & & & \\ \hline Loan balance - End of month & & & \\ \hline \end{tabular} Budgeted income statement for the entire first quarter (not for each month). (Round your final answers to the nearest whole dollar.) Budgeted balance sheet as of March 31, 2020. (Round your final answers to the nearest whole dollar.)
