Dimsdale Sports, a merchandising company, reports the following balance sheet at December $31.$ Dimadsle Sports, $5$ merchandiaing compony, reports the following bsisnce sheet at December $3$t$.$

To prepare a mater buaget for Jenusy, February, and Msrch$,$ wae the follawing informstion.

B$.$ The company's single product is purchaged for $$20$ per unit and resold for $$59$ per unt. The inventary level of $5,250$ units on

December $31$ is mare thon mansgement's desired leve, which is $20\%$ of the next month's budigeted ssies units. Budigeted sales are

January, $7,000$ units; February, $9,750$ units; Morch, $10,750$ unts; and April, $9,000$ units. All ssles are an crealt

b$.$ Cssh recelpts from ase es are bucigeted as follows: Jonuary, $$272,100$; Februsry, $$739,160,$ March, $$525,009.$

c$.$ Gssh psyments for merchsiclse purchase: sre budgeted os fallows: Janusry, $$70,000$; Februsry, $$294,000$; Morch, $$92,600.$

d$.$ Salea commiasions equai to $20\%$ of as ea collars are paid each marth. Ssles ssisries $($excluding commisions$)$ are $$4,500$ per

month.

e$.$ Genergl and adminigtrative agarles sre $$13,000$ per month. Maimenance expense equal: $$2,000$ per manth and sp pald in cash.

f$.$ New equipment purcheses are budigeted ss follaws: January, $$36,000$; Februsy, $$93,600$; and March, $$26,400.$ Buaigeted

deprecistian expence is January, $$7,000$; Februsry, $$7,975$; snd March, $$9,250.$

The company budgets a land purchase st the end of Msrch st $5$ cost of $$145\mathrm{.}000,$ which will be psid with cssh on the last day of the

month.

h$.$ The company has an agreement with its bank to obtsin additionsl laons as needed. The interest rate is Complete thi

DIMSDALE SPORTS COMPANY

Balance Sheet

December $31$

Assets

Cash $ $21,000$

Accounts receivable $520,000$

Inventory $105,000$

Equipment $ $636,000$

Less: Accumulated depreciation $79,500$

Equipment, net $556,500$

Total assets $ $1,202,500$

Liabilities and Equity

Liabilities

Accounts payable $ $350,000$

Loan payable $14,000$

Taxes payable $($due March $15)88,000$ $ $452,000$

Equity

Common stock $ $472,500$

Retained earnings $278,000$

Total stockholders$$ equity $750,500$

Total liabilities and equity $ $1,202,500$

To prepare a master budget for January, February, and March, use the following information.

The company$$s single product is purchased for $$20$ per unit and resold for $$58$ per unit. The inventory level of $5,250$ units on December $31$ is more than management$$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, $9,000$ units. All sales are on credit.

Cash receipts from sales are budgeted as follows: January, $$272,100$; February, $$739,160$; March, $$525,009.$

Cash payments for merchandise purchases are budgeted as follows: January, $$70,000$; February, $$294,000$; March, $$92,600.$

Sales commissions equal to $20\%$ of sales dollars are paid each month. Sales salaries $($excluding commissions$)$ are $$4,500$ per month.

General and administrative salaries are $$13,000$ per month. Maintenance expense equals $$2,000$ per month and is paid in cash.

New equipment purchases are budgeted as follows: January, $$36,000$; February, $$93,600$; and March, $$26,400.$ Budgeted depreciation expense is January, $ $7,000$; February, $$7,975$; and March, $$8,250.$

The company budgets a land purchase at the end of March at a cost of $$145,000,$ which will be paid with cash on the last day of the month.

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 $$21,000$ at the end of each month.

The income tax rate for the company is $35\%.$ 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:

C $1.$ 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 $31.$