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I only need help with the Monthly depreciation Expense. The other information is correct. Please look at the Monthly general and administration expense budgets at

I only need help with the Monthly depreciation Expense. The other information is correct. Please look at the Monthly general and administration expense budgets at the bottom.

Near the end of 2013, the management of Dimsdale Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2013.

DIMSDALE SPORTS COMPANY Estimated Balance Sheet December 31, 2013
Assets
Cash $ 37,000
Accounts receivable 520,000
Inventory 165,000
Total current assets 722,000
Equipment $ 538,000
Less accumulated depreciation 67,250
Equipment, net 470,750
Total assets $ 1,192,750
Liabilities and Equity
Accounts payable $ 370,000
Bank loan payable 15,000
Taxes payable (due 3/15/2014) 88,000
Total liabilities $ 473,000
Common stock 471,500
Retained earnings 248,250
Total stockholders equity 719,750
Total liabilities and equity $ 1,192,750

To prepare a master budget for January, February, and March of 2014, management gathers the following information.

a.

Dimsdale Sports single product is purchased for $30 per unit and resold for $52 per unit. The expected inventory level of 5,500 units on December 31, 2013, is more than managements desired level for 2014, which is 20% of the next months expected sales (in units). Expected sales are: January, 7,000 units; February, 8,900 units; March, 11,000 units; and April, 9,500 units.

b.

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, 2013, accounts receivable balance, $125,000 is collected in January and the remaining $395,000 is collected in February.

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, 2013, accounts payable balance, $85,000 is paid in January and the remaining $285,000 is paid in February.

d.

Sales commissions equal to 20% of sales are paid each month. Sales salaries (excluding commissions) are $72,000 per year.

e.

General and administrative salaries are $144,000 per year. Maintenance expense equals $1,900 per month and is paid in cash.

f.

Equipment reported in the December 31, 2013, balance sheet was purchased in January 2013. 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, $37,000; February, $98,000; and March, $28,500. 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.

g.

The company plans to acquire land at the end of March at a cost of $165,000, which will be paid with cash on the last day of the month.

h.

Dimsdale Sports 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 $4,950 in each month.

i.

The income tax rate for the company is 39%. Income taxes on the first quarters income will not be paid until April 15.

Required:

I only need help with the Monthly depreciation Expense. The other information is correct. Please look at the Monthly general and administration expense budgets at the bottom.

Monthly general and administrative expense
January February March Total
Equipment - beginning of month 538,000 575,000 673,000
Equipment purchases 37,000 98,000 28,500
Equipment - end of month 575,000 673,000 701,500
Monthly depreciation expense ??? ??? ???

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