DIMSDALE SPORTS COMPANY Balance Sheet December 31 Assets Cash $ 21,000 Accounts receivable 520,000 Inventory 157,500 Equipment $ 612,000 Less: Accumulated depreciation 76,500 535,500 Total assets $ 1,234,000 Liabilities and Equity Liabilities Accounts payable $ 360,000 Loan payable 12,000 Taxes payable (due March 15) 88,000 460,000 Equity Common stock $ 471,500 Retained earnings 302,500 774,000 Total liabilities and equity $ 1,234,000

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

1. The companys single product is purchased for $30 per unit and resold for $58 per unit. The inventory level of 5,250 units on December 31 is more than managements desired level, which is 20% of the next months budgeted sales units. Budgeted sales are January, 7,500 units; February, 8,750 units; March, 11,250 units; and April, 10,000 units. All sales are on credit.
2. Cash receipts from sales are budgeted as follows: January, $277,250; February, $733,793; March, $537,987.
3. Cash payments for merchandise purchases are budgeted as follows: January, $65,000; February, $319,000; March, $151,500.
4. Sales commissions equal to 20% of sales dollars are paid each month. Sales salaries (excluding commissions) are $5,500 per month.
5. General and administrative salaries are $11,000 per month. Maintenance expense equals $2,100 per month and is paid in cash.
6. New equipment purchases are budgeted as follows: January, $36,000; February, $96,000; and March, $26,400. Budgeted depreciation expense is January, $ 6,750; February, $7,750; and March, $8,025.
7. The company budgets a land purchase at the end of March at a cost of $155,000, which will be paid with cash on the last day of the month.
8. 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.
9. The income tax rate for the company is 43%. Income taxes on the first quarters income will not be paid until April 15.