Chapter 20 Project (google) Near the end of 20-BA Merchandising Preparation of a complete master budget for Wed , the manag e Sports Co, a merchandising company prepared the following estimated balance sheet for Deshers, 2017 the CHANDALE SORTS COWAY December 31, 2013 Tbilities and Equity $36,000 S60,000 $25,000 Lank loan payable 350.000 Taxe payable (de 1/1/2000) 90,000 STODO Totallaties Contact asoo 67.500 Retained earnings 246.000 479,500 Total stockholders equity $1,1 . o Toallabilities and equity Accounts receivable Inventory Total current Equipment Less: Accumulated depreciation Equipment, met Totalt $ 465.000 78,500 Su. . 500 To prepare a master budget for January, February, and March of 2020, management fathers the following Page Bua information a. The company's single product is purchased for yo per unit and old for per unit. The expected inventory level of 5,000 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 11,000 units; and April, 10,000 b. Cash sales and credit sales represent and respectively, of total sales of the credit sales, of is collected in the first month after the month of sale and 40% in the second month after the month of sale. For the December 31, 2019, accounts receivable balance, $125,000 is collected in January 2020 and the remaining $400,000 is collected in February 2020 Merchandise purchases are paid for as follows: 90% 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, $80,000 is paid in January 2020 and the remaining $280,000 is paid in February 2020. a Siles commissions equal to 90% of sales are paid each month. Sales salaries (excluding commissions) are $60,000 per year. e General and administrative salaries are $146.000 per year. Maintenance expense equals $2,000 per month and is paid in cash t 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 sabrage value. The following amounts for new equipment purchases are planned in the coming quarter: January, $36,000; February, 596,000 and March, $28,800. This equipment will be depreciated under the straight-line method over eight years with no salvage value. A full month's depreciation 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 $150,000, which will be paid with cash on the last day of the month The company has a working arrangement with its bank to obtain additional loans as needed. The interest rate is a per year, and interest is paid at each month-end based on the beginning balance. Partial 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 $25.000 at the end of each month. The income tax rate for the company is 40%. Income taxes on the first quarter's income will not be paid until April 15 Dimsdale Sports Company Sales Budget For First Quarter January 7,000 February 9,000 March 11,000 55 605,000.00 55 55 Budgeted Sales (in units) x budgeted sales price per unit Budgeted Sales Revenue (dollars) 385,000.00 $ 495,000.00 $ Dimsdale Sports Company Merchandise Purchases Budget For First Quarter January 7,000 February 9,000 March 11,000 Sales in Units 2 Total Budgeted Purchase Cost February March 37 Dimsdale Sports Company 38 Operating Expense Budget 39 For First Quarter 40 January 41 Selling Expenses: Sales Commissions Sales Salaries Total Selling Expenses 45 General and Administrative Expenses: Administrative Salaries Maintenance expense Depreciation expense 6,000 49 Total General and Admin Expenses 50 Budgeted Total Operating Expenses 51 47 7,000 7,300 Dimsdale Sports Company Schedule of Cash Receipts For First Quarter January $ 385,000.00 $ February 495,000.00 March 605,000.00 $ 57 Budgeted Sales Revenue Cash Sales (25% of Sales) Credit Sales (75% of Sales) 59 62 Budgeted Cash Receipts: Accounts Receivable, Dec 31 Cash Sales Cash from Credit Sales in Month AFTER Cash from Credit Sales in 2 Month AFTER Budgeted Total Cash Receipts 65 66 Dimsdale Sports Company Schedule of Cash Payments For First Quarter January February March 70 71 72 73 74 75 76 77 78 79 80 81 82 Accounts Payable January Purchases February Purchases Selling expenses General and Admin expenses Taxes payable Equipment purchases Purchase of Land Budgeted Total Cash Payments 84 Dimsdale Sports Company Cash Budget For First Quarter January February March 89 90 91 Beginning Cash Balance Add: Budgeted Cash Receipts Total Cash Available (150.00) S 93 Less: Budgeted Cash Payments 94 Short Term Loan interest 95 96 Preliminary Cash Balance 97 98 Additional Loan amount 99 Repayment of Loan amount 100 101 Budgeted Ending Cash Balance 102 103 Budgeted Short Term Note Balance 104 105 106 107 (15,000.00) $ (15,000.00 $ 107 Dimsdale Sports Company Budgeted Income Statement For First Quarter January February March Total First Qtr 109 110 111 Budgeted Sales Revenue 112 Less: 113 Gross Profit 114 Less Operating Expenses: 115 116 117 116 110 120 171 income before taxes Less: Income tax Expense Net Income