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Dimsdale Sports, a merchandising company, reports the following balance sheet at December 3 1 . Problem 2 0 - 8 AA ( Algo ) Merchandising:
Dimsdale Sports, a merchandising company, reports the following balance sheet at December Problem AA Algo Merchandising: Preparation of a complete master budget LO P
Dimsdale Sports, a merchandising company, reports the following balance sheet at December
To prepare a master budget for January, February, and March, use the following information.
a The company's single product is purchased for $ per unit and resold for $ per unit. The inventory level of units on
December is more than management's desired level, which is of the next month's budgeted sales units. Budgeted sales are
January, units; February, units; March, units; and April, units. All sales are on credit.
b Cash receipts from sales are budgeted as follows: January, $; February, $; March, $
c Cash payments for merchandise purchases are budgeted as follows: January, $; February, $; March, $
d Sales commissions equal to of sales dollars are paid each month. Sales salaries excluding commissions are $ per
month.
e General and administrative salaries are $ per month. Maintenance expense equals $ per month and is paid in cash.
f New equipment purchases are budgeted as follows: January, $; February, $; and March, $ Budgeted
depreciation expense is January, $; February, $; and March, $
g The company budgets a land purchase at the end of March at a cost of $ which will be paid with cash on the last day
month.
h The company has an agreement with its bank to obtain additional loans as needed. The interest rate is per month and interest is
paid at ea
DIMSDALE SPORTS COMPANY
Balance Sheet
December
Assets
Cash $
Accounts receivable
Inventory
Equipment $
Less: Accumulated depreciation
Total assets $
Liabilities and Equity
Liabilities
Accounts payable $
Loan payable
Taxes payable due March
Equity
Common stock $
Retained earnings
Total liabilities and equity $
To prepare a master budget for January, February, and March, use the following information.
The companys single product is purchased for $ per unit and resold for $ per unit. The inventory level of units on December is more than managements desired level, which is of the next months budgeted sales units. Budgeted sales are January, units; February, units; March, units; and April, units. All sales are on credit.
Cash receipts from sales are budgeted as follows: January, $; February, $; March, $
Cash payments for merchandise purchases are budgeted as follows: January, $; February, $; March, $
Sales commissions equal to of sales dollars are paid each month. Sales salaries excluding commissions are $ per month.
General and administrative salaries are $ per month. Maintenance expense equals $ per month and is paid in cash.
New equipment purchases are budgeted as follows: January, $; February, $; and March, $ Budgeted depreciation expense is January, $ ; February, $; and March, $
The company budgets a land purchase at the end of March at a cost of $ 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 per month and interest is paid at each monthend based on the beginningmonth 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 $ at the end of each month.
The income tax rate for the company is Income taxes on the first quarters income will not be paid until April
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
Budgeted balance sheet as of March
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