Dimsdale Sports, a merchandising company, reports the following balance sheet at December 31. DIMSDALE SPORTS COMPANY Balance Sheet Cash Assets Accounts receivable December 31 Inventory Equipment Total assets Less: Accumulated depreciation Liabilities and Equity Liabilities Accounts payable Loan payable Taxes payable (due March 15) Equity Common stock Retained earnings Total liabilities and equity $ 20,500 520,000 135,000 $ 636,000 79,500 556,500 $ 1,232,000 $ 350,000 13,000 92,000 $ 473,500 303,500 455,000 777,000 $ 1,232,000 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 $55 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, 7,000 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, $235,500; February, $714,160; March, $489,321 c. Cash payments for merchandise purchases are budgeted as follows: January, $65,000; February, $310,500; March, $156,900. d. Sales commissions equal to 20% of sales dollars are paid each month. Sales salaries (excluding commissions) are $4,000 per month. e. General and administrative salaries are $11,000 per month. Maintenance expense equals $1,900 per month and is paid in cash. f. New equipment purchases are budgeted as follows: January, $36,000; February, $93,600; and March, $24,000. Budgeted depreciation expense is January, $ 7,000; February, $7,975; and March, $8.225. 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 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. 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. 7. Budgeted income statement for entire quarter (not monthly) ended March 31. 8. Budgeted balance sheet as of March 31