DIMSDALE SPORTS COMPANY Estimated Balance Sheet December 31, 2017
Assets
Cash	$	35,500
Accounts receivable		520,000
Inventory		105,000
Total current assets				$	660,500
Equipment		612,000
Less: accumulated depreciation		76,500
Equipment, net					535,500
Total assets				$	1,196,000
Liabilities and Equity
Accounts payable	$	375,000
Bank loan payable		16,000
Taxes payable (due 3/15/2018)		89,000
Total liabilities				$	480,000
Common stock		471,000
Retained earnings		245,000
Total stockholders equity					716,000
Total liabilities and equity				$	1,196,000

The companys single product is purchased for $20 per unit and resold for $54 per unit. The expected inventory level of 5,250 units on December 31, 2017, is more than managements desired level, which is 20% of the next months expected sales (in units). Expected sales are: January, 7,250 units; February, 8,500 units; March, 11,000 units; and April, 9,500 units. Cash sales and credit sales represent 20% and 80%, respectively, of total sales. Of the credit sales, 61% is collected in the first month after the month of sale and 39% in the second month after the month of sale. For the December 31, 2017, accounts receivable balance, $130,000 is collected in January and the remaining $390,000 is collected in February. Merchandise purchases are paid for as follows: 20% in the first month after the month of purchase and 80% in the second month after the month of purchase. For the December 31, 2017, accounts payable balance, $85,000 is paid in January and the remaining $290,000 is paid in February. Sales commissions equal to 20% of sales are paid each month. Sales salaries (excluding commissions) are $66,000 per year. General and administrative salaries are $144,000 per year. Maintenance expense equals $2,200 per month and is paid in cash. Equipment reported in the December 31, 2017, balance sheet was purchased in January 2017. It is being depreciated over eight years under the straight-line method with no salvage value. The following amounts for new equipment purchases are planned in the coming quarter: January, $36,000; February, $91,200; and March, $19,200. This equipment will be depreciated under the straight-line method over eight years with no salvage value. A full months depreciation is taken for the month in which equipment is purchased. The company plans to buy land at the end of March at a cost of $150,000, which will be paid with cash on the last day of the month. The company has a working arrangement with its bank to obtain additional loans as needed. The interest rate is 12% per year, and interest is paid at each month-end based on the beginning balance. Partial or full payments on these loans can be made on the last day of the month. The company has agreed to maintain a minimum ending cash balance of $8,640 at the end of each month. The income tax rate for the company is 39%. Income taxes on the first quarters income will not be paid until April 15.

Required: Prepare a master budget for each of the first three months of 2018; include the following component budgets: 6. Monthly cash budgets.7. Budgeted income statement for the entire first quarter (not for each month).8. Budgeted balance sheet as of March 31, 2018.

DIMSDALE SPORTS CO.
Sales Budget
For January, February, and March 2018
	Budgeted Unit Sales	Budgeted Unit Price	Budgeted Total Dollars
January	7,250	$54	391,500
February	8,500	54	459,000
March	11,000	54	594,000
Totals for the quarter	26,750	$54.00	1,444,500

DIMSDALE SPORTS CO.
Merchandise Purchases Budget
January, February, and March 2018
	January	February	March	Total
Next month's budgeted sales (units)	8,500	11,000	9,500
Ratio of inventory to future sales	20%	20%	20%
Budgeted ending inventory (units)	1,700	2,200	1,900
Budgeted units sales for month	7,250	8,500	11,000
Required units of available merchandise	8,950	10,700	12,900
Beginning inventory (units)	(5,250)	(1,700)	(2,200)
Units to be purchased	3,700	9,000	10,700	23,400
Budgeted cost per unit	$20	$20	$20	$20
Budgeted merchandise purchases	$74,000	$180,000	$214,000	$468,000

DIMSDALE SPORTS COMPANY
Selling Expense Budget
January, February, and March 2018
	January	February	March	Total
Budgeted sales	$391,500	$459,000	$594,000
Sales commission percent	20%	20%	20%
Sales commissions	78,300	91,800	118,800	$288,900
Sales salaries	5,500	5,500	5,500	16,500
Total budgeted selling expenses	$83,800	$97,300	$124,300	$305,400

	January	February	March	Total
Equipment - beginning of month	$612,000	$648,000	$739,200
Equipment purchases	36,000	91,200	19,200
Equipment - end of month	$648,000	$739,200	$758,400
Monthly depreciation expense	$6,375	$6,750	$7,700	$20,825
DIMSDALE SPORTS CO.
General and Administrative Expense Budget
January, February, and March 2018
	January	February	March	Total
Depreciation expense	$6,375	$6,750	$7,700	$20,825
Maintenance expense	2,200	2,200	2,200	6,600
Salaries expense	12,000	12,000	12,000	36,000
Total	$20,575	$20,950	$21,900	$63,425

DIMSDALE SPORTS COMPANY
Capital Expenditures Budget
January, February, and March 2018
	January	February	March	Total
Equipment purchases	$36,000	$91,200	$19,200	$146,400
Land purchase	0	$0	150,000	150,000
Total	$36,000	$91,200	$169,200	$296,400