Dimsdale Sports, a merchandising company, reports the following balance sheet at December 31. DINSDALE SPORTS COMPANY Balance Sheet December 31 Assets Cashi Accounts receivable 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 $ 20,000 520,000 100,000 1 576,000 72,000 504,000 $ 1,144,000 $380,000 12,000 89,000 481,000 $ 471,500 191,500 663,000 $1,144,000 To prepare a master budget for January, February, and March, use the following information a. The company's single product is purchased for $20 per unit and resold for $59 per unit. The inventory level of 5,000 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, 6,750 units, February, 8,750 units; March, 11,000 units; and April, 11,000 units. All sales are on credit b. Cash receipts from sales are budgeted as follows: January, $259,388, February, $743,771, March, $534,333 c. Cash payments for merchandise purchases are budgeted as follows. January, $60,000. February, $334,000, March, $92.800. 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 $13,000 per month. Maintenance expense equals $1,900 per month and is paid in cash 1. New equipment purchases are budgeted as follows: January, $40,800, February, $93,600, and March, $21,600. Budgeted depreciation expense is January, $ 6,425, February, $7,400, and March, $7,625. g. 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 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 $20,000 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