Near the end of 2011, the management of Simid Sports Co., a merchandising company, prepared the following estimated statement of financial position for December 31, 2011. SIMID SPORTS COMPANY Estimated Statement of Financial position December 31, 2011 Assets Cash $ 37,000 Accounts receivable 520,000 Inventory 100,000 Total current assets 657,000 Equipment $ 540,000 Less accumulated depreciation 67,500 472,500 Total assets $ 1,129,500 Liabilities and Equity Accounts payable $ 345,000 Bank loan payable 15,000 Tax payable (due 3/15/2012) 91,000 Total liabilities $ 451,000 Share capitalordinary 471,500 Retained earnings 207,000 Total stockholders equity 678,500 Total liabilities and equity $ 1,129,500 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 $20 per unit and resold for $52 per unit. The expected inventory level of 5,000 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, 7,250 units; February, 8,750 units; March, 11,500 units; and April, 10,000 units. b. Cash sales and credit sales represent 25% and 75%, respectively, of total sales. Of the credit sales, 65% is collected in the first month after the month of sale and 35% in the second month after the month of sale. For the December 31, 2011, 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, 2011, accounts payable balance, $90,000 is paid in January and the remaining $255,000 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 $2,100 per month and is paid in cash. f. Equipment reported in the December 31, 2011, statement of financial position was purchased in January 2011. It is being depreciated over eight years under the straight-line method with no residual value. The following amounts for new equipment purchases are planned in the coming quarter: January, $37,000; February, $95,000; and March, $29,000. This equipment will be depreciated under the straight-line method over eight years with no residual 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. 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 $18,600 in each month. i. The income tax rate for the company is 35%. Income tax 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: