a$.$ The company's single product is purchased for $$30$ per unit and resold for $$59$ 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, $9,000$ 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, $$248,325$; February, $$741,949$; March, $$542,638.$

c$.$ C$$sh payments for merchandise purchases are budgeted as follows: January, $$65,000$; February, $$322,300$; March, $$165,900.$

d$.$ Sales commissions equal to $20\%$ of sales dollars are paid each month. Sales salaries $($excluding commissions$)$ are $$6,500$ per month.

e$.$ General and administrative salaries are $$11,000$ per month. Maintenance expense equals $$2,200$ per month and is paid in cash.

f$.$ New equipment purchases are budgeted as follows: January, $$38,400$; February, $$103,200$; and March, $$21,600.$ Budgeted depreciation expense is January, $$6,900$; February, $$7,975$; and March, $$8,200.$

g$.$ The company budgets a land purchase at the end of March at a cost of $$160,000,$ which will be paid with cash on thest 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 and 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.

i$.$ The income tax rate for the company is $39\%.$ 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:

Sales budgets.

Merchandise purchases budgets.

Selling expense budgets.

General and administrative expense budgets. Hint: Depreciation is included in the general and administrative budget for merchandisers.

Capital expenditures budgets.

Cash budgets.

Budgeted income statement for entire quarter $($not monthly$)$ ended March $31.$

Budgeted balance sheet as of March $31.$

Dimsdale Sports, a merchandising company, reports the following balance sheet at December $31.$

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