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Near the end of 2019, the management of Dimsdale Sports Co., a merchandis sheet for December 31, 2019. DIMSDALE SPORTS COMPANY Estimated Balance Sheet December 31, 2019 Assets Cash $ 35,500 Accounts receivable 520,000 Inventory 142,500 Total current assets $ 698,000 Equipment 648,000 Less: Accumulated depreciation 81,000 Equipment, net 567,000 Total assets $1,265,000 Liabilities and Equity Accounts payable $ 365,000 Bank loan payable 11,000 Taxes payable (due 3/15/2020) 88,000 Total liabilities $ 464,000 Common stock 1,500 Retained earnings 329,500 Total stockholders' equity 801,000 Total liabilities and equity $ 1,265,000 a. The company's single product is purchased for $30 per unit and resold for $56 per unit. The expected Inventory level of 4.750 units on December 31, 2019, is more than management's desired level, which is 20% of the next month's expected sales (in units) Expected sales are January 7,000 units: February. 9,250 units: March 11.500 units; and April 11,000 units. b. Cash sales and credit sales represent 25% and 75%, respectively, of total sales of the credit sales, 59% is collected in the first month after the month of sale and 41% in the second month after the month of sale. For the December 31, 2019, accounts receivable balance $120,000 is collected in January 2020 and the remaining $400,000 is collected in February 2020. c. 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, 2019, accounts payable balance $65.000 is paid in January 2020 and the remaining $300,000 is paid in February 2020, d. Sales commissions equal to 20% of sales are paid each month. Sales salaries (excluding commissions) are $66,000 per year, e. General and administrative salaries are $144,000 per year. Maintenance expense equals $2,000 per month and is paid in cash 1. Equipment reported in the December 31, 2019, balance sheet was purchased in January 2019. 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, $98.400, and March $21,600. This equipment will be depreciated under the straight line method over eight years with no salvage value. A full month's depreciation is taken for the month in which equipment is purchased g. The company plans to buy land at the end of March at a cost of $160,000, which will be paid with cash on the last day of the month, n. 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 $38,000 at the end of each month. 1. The income tax rate for the company is 41%. Income taxes on the first quarter's income will not be paid until April 15 Required 7 Required 8 Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 6 Calc Cash Bud Monthly merchandise purchases budgets. Next month's budgeted sales (units) Ratio of inventory to future sales Budgeted ending Inventory units) Budgeted units sales for month Required units of available merchandise Beginning inventory (units) Units to be purchased Budgeted cost per unit Budgeted merchandise purchases DIMSDALE SPORTS CO. Merchandise Purchases Budget January, February, and March 2020 January February 9,250 11,500 20% 20% 1,850 2,300 7,000 9.250 8,850 11.550 4.750 4.100 30 5 30$ March 11,000 20% 2.200 11.500 13,700 30 $ 30 Prey 1 of 1 Next Search O > E 73 o 3 S wo E R. F G K . N M M Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 6 Calc Cash Bud Require Monthly selling expense budgets. DIMSDALE SPORTS COMPANY Selling Expense Budget January, February, and March 2020 January February March 644,000 Budgeted sales $ Sales commissions February March January $ 648,000 Equipment - beginning of month Equipment purchases Equipment - end of month DIMSDALE SPORTS CO. General and Administrative Expense Budget January, February, and March 2020 January February March Monthly capital expenditures budgets. DIMSDALE SPORTS COMPANY Capital Expenditures Budget January, February, and March 2020 January February March Total