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Near the end of 2 0 1 9 , the management of Dimsdale Sports Co . , a merchandising company, prepared the following estimated balance
Near the end of the management of Dimsdale Sports Co a merchandising company, prepared the following estimated balance sheet for December DIMSDALE SPORTS COMPANY Estimated Balance Sheet December Assets Cash $ Accounts receivable Inventory Total current assets $ Equipment Less: Accumulated depreciation Equipment, net Total assets $ Liabilities and Equity Accounts payable $ Bank loan payable Taxes payable due Total liabilities $ Common stock Retained earnings Total stockholders equity Total liabilities and equity $ To prepare a master budget for January, February, and March of management gathers the following information. The companys single product is purchased for $ per unit and resold for $ per unit. The expected inventory level of units on December is more than managements desired level, which is of the next months expected sales in units Expected sales are January, units; February, units; March, units; and April, units. Cash sales and credit sales represent and respectively, of total sales. Of the credit sales, is collected in the first month after the month of sale and in the second month after the month of sale. For the December accounts receivable balance, $ is collected in January and the remaining $ is collected in February Merchandise purchases are paid for as follows: in the first month after the month of purchase and in the second month after the month of purchase. For the December accounts payable balance, $ is paid in January and the remaining $ is paid in February Sales commissions equal to of sales are paid each month. Sales salaries excluding commissions are $ per year. General and administrative salaries are $ per year. Maintenance expense equals $ per month and is paid in cash. Equipment reported in the December balance sheet was purchased in January It is being depreciated over eight years under the straightline method with no salvage value. The following amounts for new equipment purchases are planned in the coming quarter: January, $; February, $; and March, $ This equipment will be depreciated under the straightline 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 $ 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 per year, and interest is paid at each monthend 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 $ 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 each of the first three months of ; include the following component budgets: Monthly sales budgets. Monthly merchandise purchases budgets. Monthly selling expense budgets. Monthly general and administrative expense budgets. Monthly capital expenditures budgets. Monthly cash budgets. Budgeted income statement for the entire first quarter not for each month Budgeted balance sheet as of March
Near the end of the management of Dimsdale Sports Co a merchandising company, prepared the following estimated balance sheet for December
DIMSDALE SPORTS COMPANY
Estimated Balance Sheet
December
Assets
Cash $
Accounts receivable
Inventory
Total current assets $
Equipment
Less: Accumulated depreciation
Equipment, net
Total assets $
Liabilities and Equity
Accounts payable $
Bank loan payable
Taxes payable due
Total liabilities $
Common stock
Retained earnings
Total stockholders equity
Total liabilities and equity $
To prepare a master budget for January, February, and March of management gathers the following information.
The companys single product is purchased for $ per unit and resold for $ per unit. The expected inventory level of units on December is more than managements desired level, which is of the next months expected sales in units Expected sales are January, units; February, units; March, units; and April, units.
Cash sales and credit sales represent and respectively, of total sales. Of the credit sales, is collected in the first month after the month of sale and in the second month after the month of sale. For the December accounts receivable balance, $ is collected in January and the remaining $ is collected in February
Merchandise purchases are paid for as follows: in the first month after the month of purchase and in the second month after the month of purchase. For the December accounts payable balance, $ is paid in January and the remaining $ is paid in February
Sales commissions equal to of sales are paid each month. Sales salaries excluding commissions are $ per year.
General and administrative salaries are $ per year. Maintenance expense equals $ per month and is paid in cash.
Equipment reported in the December balance sheet was purchased in January It is being depreciated over eight years under the straightline method with no salvage value. The following amounts for new equipment purchases are planned in the coming quarter: January, $; February, $; and March, $ This equipment will be depreciated under the straightline 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 $ 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 per year, and interest is paid at each monthend 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 $ 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 each of the first three months of ; include the following component budgets:
Monthly sales budgets.
Monthly merchandise purchases budgets.
Monthly selling expense budgets.
Monthly general and administrative expense budgets.
Monthly capital expenditures budgets.
Monthly cash budgets.
Budgeted income statement for the entire first quarter not for each month
Budgeted balance sheet as of March
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