7-8AA (Algo) Merchandising: Preparation of a complete master budget LO P4 Dimsdale Sports, a merchandising company, reports the following balance sheet at December 31. DIMSDALE SPORTS COMPANY Balance Sheet Cash Accounts receivable Assets December 31 $ 20,500 520,000 Inventory Equipment Less: Accumulated depreciation Total assets Liabilities $ 600,000 75,000 135,000 525,000 $ 1,200,500 Liabilities and Equity Accounts payable Loan payable Taxes payable (due March 15) $ 355,000 14,000 92,000 461,000 Equity Common stock Retained earnings Total liabilities and equity To prepare a master budget for January, February, and March, use the following information. 5 474,500 265,000 739,500 $1,200,500 To prepare a master budget for January, February, and March, use the following information. a. The company's single product is purchased for $30 per unit and resold for $56 per unit. The inventory level of 4,500 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, 7,250 units; February, 8,750 units; March, 11,250 units; and April, 10,000 units. All sales are on credit. b. Cash receipts from sales are budgeted as follows: January, $246,800; February, $721,046, March, $510,244. c. Cash payments for merchandise purchases are budgeted as follows: January, $60,000; February, $322,000; March, $163,500. d. Sales commissions equal to 20% of sales dollars are paid each month. Sales salaries (excluding commissions) are $5,000 per month. e. General and administrative salaries are $12,000 per month. Maintenance expense equals $2,100 per month and is paid in cash. f. New equipment purchases are budgeted as follows: January, $38,400, February, $96,000; and March, $26,400. Budgeted depreciation expense is January, $ 6,650: February, $7,650, and March, $7.925. 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. h. The company has an agreement with its bank to obtain additional loans as needed. The interest rate is 1% per month ad interest is paid at each month-end based on the beginning-month balance. Partial or full payments on these loans are made on the last day of the month. The company maintains a minimum ending cash balance of $20,500 at the end of each month. 1. The income tax rate for the company is 37% Income taxes on the first quarter's income will not be paid until April 15. Required: Prepare a master budget for the months of January, February, and March that has the following budgets: 1. Sales budgets. 2. Merchandise purchases budgets. 3. Selling expense budgets. 4. General and administrative expense budgets. Hint: Depreciation is included in the general and administrative budget for merchandisers. 5. Capital expenditures budgets. 6. Cash budgets. Pray 1 of 1 Next 100 1 4. General and administrative expense budgets. Hint: Depreciation is included in the general and administrative budget for merchandisers 5. Capital expenditures budgets 6. Cash budgets. 7. Budgeted income statement for entire quarter (not monthly) ended March 31. 8. Budgeted balance sheet as of March 31. points w Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Sales budgets. D DIMSDALE SPORTS Sales Budget January February March Totals Budgeted sales units 7,500 $ 9.000 11,000 27,500 Selling price per unit $ 59 S 59 $ 59 $ 59 x Total budgeted sales S 442.500 $531,000 $ 649,000 $ 1.622.500 there to search 0 Required 2 > Prex 1 of 1 Next e Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Merchandise purchases budgets. Next period budgeted sales units Ratio of inventory to future sales Desired ending inventory units Total required units Units to be purchased Cost per unit Cost of merchandise purchases DIMSDALE SPORTS Merchandise Purchases Budget January February March ints Answer is not complete. Complete this question by entering your answers in the tabs below. Required 11 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Selling expense budgets. DIMSDALE SPORTS Selling Expense Budget January February March Budgeted sales Sales commissions < Required 2 Required 4 > 100 points Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Requi Required 5 Required 6 Required 7 Required General and administrative expense budgets. Hint: Depreciation is included in the general and administrative budget for merchandisers. DIMSDALE SPORTS General and Administrative Expense Blodget January February March Total Total general and administrative expenses 100 points 1 6. Cash budgets 7. Budgeted income statement for entire quarter (not monthly) ended March 31. 8. Budgeted balance sheet as of March 31 Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 61 Required 7. Required B Capital expenditures budgets. Total capital expenditures DIMSDALE SPORTS + Capital Expenditures Blodget January February March Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 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.) Beginning cash balance Total cash available Less: Cash payments for Total cash payments Preliminary cash balance. Ending cash balance DIMSDALE SPORTS COMPANY Cash Budget January February March Loan balance-Beginning of month Additional loan (loan repayment) Loan balance-End of month 0 Loan balance January February March Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Budgeted income statement for the entire first quarter (not for each month). (Round your final answers to the nearest whole dollar.) DIMSDALE SPORTS COMPANY Budgeied Income Statement For Three Months Ended March 31 Selling, general and administrative expenses Total operating expenses 0 0 Complete this question by entering your answers in the tabs below. 00 Required 1 oints Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Budgeted balance sheet as of March 31. (Round your final answers to the nearest whole dollar) DIMSDALE SPORTS COMPANY Budgeted Balance Sheet March 31 Assets 13 Total assets Liabilities and Equity Liabetes Equity Total Liabildies and Equity