Near the end of 2011, the management of Simid Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2011.

SIMID SPORTS COMPANY Estimated Balance Sheet December 31, 2011
Assets
Cash				$	35,000
Accounts receivable					520,000
Inventory					142,500
Total current assets					697,500
Equipment	$	541,000
Less accumulated depreciation		67,625			473,375
Total assets				$	1,170,875
Liabilities and Equity
Accounts payable	$	340,000
Bank loan payable		15,000
Taxes payable (due 3/15/2012)		89,000
Total liabilities				$	444,000
Common stock		473,000
Retained earnings		253,875
Total stockholders equity					726,875
Total liabilities and equity				$	1,170,875

To prepare a master budget for January, February, and March of 2012, management gathers the following information.

a.	Simid Sports single product is purchased for $30 per unit and resold for $52 per unit. The expected inventory level of 4,750 units on December 31, 2011, is more than managements desired level for 2012, which is 20% of the next months expected sales (in units). Expected sales are: January, 7,500 units; February, 9,000 units; March, 11,250 units; and April, 10,000 units.
b.	Cash sales and credit sales represent 25% and 75%, respectively, of total sales. Of the credit sales, 57% is collected in the first month after the month of sale and 43% in the second month after the month of sale. For the December 31, 2011, accounts receivable balance, $130,000 is collected in January and the remaining $390,000 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, 2011, accounts payable balance, $70,000 is paid in January and the remaining $270,000 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 $2,000 per month and is paid in cash.
f.	Equipment reported in the December 31, 2011, balance sheet was purchased in January 2011. 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, $96,000; 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 $180,000, which will be paid with cash on the last day of the month.
h.	Simid 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 $43,350 in each month.
i.	The income tax rate for the company is 43%. 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 2012; include the following component budgets:

References

Section BreakLearning Objective: 23-P1 Prepare each component of a master budget and link each to the budgeting process.

Learning Objective: 23-C2 Describe a master budget and the process of preparing it.Learning Objective: 23-P2 Link both operating and capital expenditures budgets to budgeted financial statements.

7.

value: 1.78 points

Required information

1.	Monthly sales budgets. (Omit the "$" sign in your response.)

SIMID SPORTS CO. Sales Budget January, February, and March 2012
	Budgeted Units	Budgeted Unit Price	Budgeted Total Dollars
January 2012		$	$
February 2012
March 2012
Total for the first quarter			$

References

eBook & Resources

WorksheetLearning Objective: 23-C2 Describe a master budget and the process of preparing it.Learning Objective: 23-P2 Link both operating and capital expenditures budgets to budgeted financial statements.

Difficulty: HardLearning Objective: 23-P1 Prepare each component of a master budget and link each to the budgeting process.

Check my work

8.

value: 1.78 points

Required information

2.	Monthly merchandise purchases budgets. (Units to be deducted should be indicated with a minus sign. Omit the "$" & "%" signs in your response.)

SIMID SPORTS CO. Merchandise Purchases Budget January, February, and March 2012
	January	February	March	Total
(Click to select)Budgeted merchandise purchasesNext months budgeted salesRequired available merchandiseBeginning inventoryBudgeted cost per unit
(Click to select)Budgeted merchandise purchasesBeginning inventoryBudgeted cost per unitRatio of inventory to future salesRequired available merchandise	%	%	%
(Click to select)Required available merchandiseBudgeted ending inventoryBudgeted cost per unitBudgeted beginning inventoryBudgeted merchandise purchases
(Click to select)Budgeted beginning inventoryBudgeted ending inventoryAdd: Budgeted salesDeduct: Budgeted salesBudgeted merchandise purchases
(Click to select)Ratio of inventory to future salesBudgeted merchandise purchasesBeginning inventoryBudgeted cost per unitRequired available merchandise
(Click to select)Budgeted salesAdd: Beginning inventoryBudgeted merchandise purchasesBudgeted ending inventoryDeduct: Beginning inventory
(Click to select)Budgeted cost per unitBudgeted merchandise purchasesRatio of inventory to future salesUnits to be purchasedRequired available merchandise
(Click to select)Ratio of inventory to future salesUnits to be purchasedBudgeted merchandise purchasesBudgeted cost per unitRequired available merchandise	$	$	$	$
(Click to select)Budgeted ending inventoryRequired available merchandiseBudgeted salesBeginning inventoryBudgeted merchandise purchases	$	$	$	$

References

eBook & Resources

WorksheetLearning Objective: 23-C2 Describe a master budget and the process of preparing it.Learning Objective: 23-P2 Link both operating and capital expenditures budgets to budgeted financial statements.

Difficulty: HardLearning Objective: 23-P1 Prepare each component of a master budget and link each to the budgeting process.

Check my work

9.

value: 1.78 points

Required information

3.	Monthly selling expense budgets. (Omit the "$" & "%" signs in your response.)

SIMID SPORTS CO. Selling Expense Budget January, February, and March 2012
	January	February	March	Total
(Click to select)Budgeted purchasesSales commissions expenseSales salariesBudgeted salesSales commission percent	$	$	$
(Click to select)Sales salariesBudgeted purchasesSales commissions expenseBudgeted salesSales commission percent	%	%	%
(Click to select)Budgeted purchasesSales commissions expenseSales salariesBudgeted salesSales commission percent				$
(Click to select)Budgeted salesSales commissions expenseSales commission percentBudgeted purchasesSales salaries
Total selling expenses	$	$	$	$

References

eBook & Resources

WorksheetLearning Objective: 23-C2 Describe a master budget and the process of preparing it.Learning Objective: 23-P2 Link both operating and capital expenditures budgets to budgeted financial statements.

Difficulty: HardLearning Objective: 23-P1 Prepare each component of a master budget and link each to the budgeting process.

Check my work

10.

value: 1.78 points

Required information

4.	Monthly general and administrative expense budgets. (Do not round your intermediate calculations. Round your final answers to the nearest whole dollar. Omit the "$" sign in your response.)

SIMID SPORTS CO. General and Administrative Expense Budget January, February, and March 2012
	January	February	March	Total
(Click to select)Rent expenseSales salariesSalariesEquipment purchasesLand purchases	$	$	$	$
(Click to select)Equipment purchasesMaintenanceSales salariesLand purchasesRent expense
(Click to select)Equipment purchasesLand purchasesRent expenseSales salariesDepreciation
Total expenses	$	$	$	$

References

eBook & Resources

WorksheetLearning Objective: 23-C2 Describe a master budget and the process of preparing it.Learning Objective: 23-P2 Link both operating and capital expenditures budgets to budgeted financial statements.

Difficulty: HardLearning Objective: 23-P1 Prepare each component of a master budget and link each to the budgeting process.

Check my work

11.

value: 1.78 points

Required information

5.	Monthly capital expenditures budgets. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Omit the "$" sign in your response.)

SIMID SPORTS CO. Capital Expenditures Budget January, February, and March 2012
	January	February	March
(Click to select)Equipment purchasesPayments for merchandiseDepreciationSalariesMaintenance	$	$	$
(Click to select)Payments for merchandiseLand purchaseSalariesMaintenanceDepreciation
Total	$	$	$

References

eBook & Resources

WorksheetLearning Objective: 23-C2 Describe a master budget and the process of preparing it.Learning Objective: 23-P2 Link both operating and capital expenditures budgets to budgeted financial statements.

Difficulty: HardLearning Objective: 23-P1 Prepare each component of a master budget and link each to the budgeting process.

Check my work

12.

value: 1.78 points

Required information

6.

Monthly cash budgets. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values except negative preliminary cash balance and repayment of loan to bank which should be indicated by a minus sign. Round your intermediate calculations and final answers to the nearest dollar amount. Omit the "$" sign in your response.)

SIMID SPORTS CO. Cash Budget January, February, and March 2012
	January	February	March
(Click to select)Sales salariesDepreciationCash receipts from customersBeginning cash balanceEnding cash balance	$	$	$
(Click to select)Payments for merchandiseInterestCash receipts from customersPurchase of landSales commissions
Total cash available
Cash disbursements
(Click to select)Beginning cash balancePayments for merchandiseMaintenanceDepreciationCash receipts from customers
(Click to select)Repayment of loan to bankSales commissionsBeginning cash balanceDepreciationCash receipts from customers
(Click to select)DepreciationRepayment of loan to bankSales salariesCash receipts from customersBeginning cash balance
(Click to select)General & administrative salariesDepreciationRepayment of loan to bankBeginning cash balanceCash receipts from customers
(Click to select)Beginning cash balanceRepayment of loan to bankDepreciationMaintenance expenseCash receipts from customers
(Click to select)Repayment of loan to bankDepreciationBeginning cash balanceInterestCash receipts from customers
(Click to select)Beginning cash balanceRepayment of loan to bankTaxes payableCash receipts from customersDepreciation
(Click to select)DepreciationPurchases of equipmentBeginning cash balanceRepayment of loan to bankCash receipts from customers
(Click to select)Beginning cash balancePurchase of landRepayment of loan to bankDepreciationCash receipts from customers
Total cash disbursements
(Click to select)Beginning cash balanceInterestEnding cash balancePreliminary cash balanceLoan balance, end of month
(Click to select)Loan balance, end of monthEnding cash balanceRepayment of loan to bankInterestBeginning cash balance
(Click to select)Beginning cash balancePreliminary cash balanceInterestRepayment of loan to bankEnding cash balance	$	$	$
(Click to select)Ending cash balanceRepayment of loan to bankPreliminary cash balanceLoan balance, end of monthBeginning cash balance	$	$	$

References

eBook & Resources

WorksheetLearning Objective: 23-C2 Describe a master budget and the process of preparing it.Learning Objective: 23-P2 Link both operating and capital expenditures budgets to budgeted financial statements.

Difficulty: HardLearning Objective: 23-P1 Prepare each component of a master budget and link each to the budgeting process.

Check my work

13.

value: 1.78 points

Required information

7.	Budgeted income statement for the entire first quarter (not for each month). (Round your answers to the nearest dollar amount. Input all amounts as positive values. Omit the "$" sign in your response.)

SIMID SPORTS CO. Budgeted Income Statement For Three Months Ended March 31, 2012
(Click to select)CashInterest expenseAccounts receivableMaintenance expenseSales commissionsSalesAccounts payableInventory		$
(Click to select)CashCost of goods soldInterest expenseAccounts payableMaintenance expenseInventoryAccounts receivableSales commissions
(Click to select)Gross lossGross profit
Operating expenses
(Click to select)Maintenance expenseSalesAccounts receivableSales commissionsInterest expenseDepreciation expenseSales salariesGeneral administrative salaries	$
(Click to select)Interest expenseGeneral administrative salariesSales commissionsDepreciation expenseSales salariesAccounts receivableSalesMaintenance expense
(Click to select)Sales commissionsInterest expenseAccounts receivableDepreciation expenseSalesGeneral administrative salariesSales salariesMaintenance expense
(Click to select)Maintenance expenseSales commissionsSales salariesAccounts receivableInterest expenseGeneral administrative salariesSalesDepreciation expense
(Click to select)General administrative salariesMaintenance expenseSalesSales commissionsSales salariesDepreciation expenseAccounts receivableInterest expense
(Click to select)Accounts receivableSales commissionsDepreciation expenseInterest expenseSales salariesGeneral administrative salariesMaintenance expenseSales
(Click to select)CashInterest expenseMaintenance expenseAccounts payableIncome before taxesSales commissionsAccounts receivableCost of goods sold
(Click to select)Interest expenseAccounts receivableCashIncome taxesCost of goods soldMaintenance expenseAccounts payableSales commissions
(Click to select)Net lossNet income		$

References

eBook & Resources

WorksheetLearning Objective: 23-C2 Describe a master budget and the process of preparing it.Learning Objective: 23-P2 Link both operating and capital expenditures budgets to budgeted financial statements.

Difficulty: HardLearning Objective: 23-P1 Prepare each component of a master budget and link each to the budgeting process.

Check my work

14.

value: 1.78 points

Required information

8.

Budgeted balance sheet as of March 31, 2012. (Be sure to list the assets in order of their liquidity. Round your answers to the nearest dollar amount. Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Round your intermediate calculations and final answers to the nearest dollar amount. Omit the "$" sign in your response.)

SIMID SPORTS CO. Budgeted Balance Sheet March 31, 2012
Assets
(Click to select)Common stockAccounts payableInventoryTaxes payableCash			$
(Click to select)Accounts receivableInventoryAccounts payableSalesCash
(Click to select)Accounts payableInventoryAccounts receivableCommon stockTaxes payable
Total Current Assets
(Click to select)CashLandRetained earningsTaxes payableCommon stock
(Click to select)Accounts receivableEquipmentInventoryCashAccounts payable	$
(Click to select)Accounts payableAdd: Accumulated depreciationLess: Accumulated depreciationEquipmentAccounts receivable
Total Assets			$
Liabilities and Equity
(Click to select)CashInventoryAccounts payableAccounts receivableEquipment			$
(Click to select)CashAccounts receivableBank loan payableInventoryAccounts payable
(Click to select)Taxes payableAccounts payableAccounts receivableCashLand
Total Liabilities
(Click to select)LandTaxes payableCashCommon stockInventory	$
(Click to select)Accounts payableAccounts receivableCashRetained earningsInventory
Total Stockholders' Equity
Total Liabilities & Equity			$

References

eBook & Resources