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	$	36,000
Accounts receivable		520,000
Inventory		142,500
Total current assets					698,500
Equipment	$	535,000
Less accumulated depreciation		66,875
Equipment, net					468,125
Total assets				$	1,166,625
Liabilities and Equity
Accounts payable	$	370,000
Bank loan payable		16,000
Taxes payable (due 3/15/2014)		90,000
Total liabilities				$	476,000
Common stock		472,500
Retained earnings		218,125
Total stockholders' equity					690,625
Total liabilities and equity				$	1,166,625

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 $53 per unit. The expected inventory level of 4,750 units on December 31, 2013, is more than management's desired level for 2014, which is 20% of the next month's expected sales (in units). Expected sales are: January, 6,500 units; February, 9,300 units; March, 10,750 units; and April, 11,000 units.
b.	Cash sales and credit sales represent 20% and 80%, 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, 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, $70,000 is paid in January and the remaining $300,000 is paid in February.
d.	Sales commissions equal to 20% of sales are paid each month. Sales salaries (excluding commissions) are $78,000 per year.
e.	General and administrative salaries are $156,000 per year. Maintenance expense equals $2,000 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, $34,000; February, $98,000; and March, $28,000. 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 acquire land at the end of March at a cost of $155,000, 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 $19,340 in each month.
i.	The income tax rate for the company is 43%. Income taxes on the first quarter's income will not be paid until April 15.

Required:

Prepare a master budget for each of the first three months of 2014; include the following component budgets: SEE ATTACHED FOR QUESTIONS!

\f1. Monthly sales budgets. DIMSDALE SPORTS CO. Sales Budget For January, February, and March, 2014 Budgeted Unit Sales Budgeted Unit Price Budgeted Total Dollars January February March Totals for the quarter References eBook & Resources Expanded table Learning Objective: 22-C2 Describe a master budget and the process of preparing it. Difficulty: Hard Learning Objective: 22-P1 Prepare each component of a master budget and link each to the budgeting process. Check my work 2. Monthly merchandise purchases budgets. Learning Objective: 22-P2 Link both operating and capital expenditures budgets to budgeted financial statements. DIMSDALE SPORTS CO. Merchandise Purchases Budget January, February, and March 2014 January Next month's budgeted sales (units) Ratio of inventory to future sales February March 9,300 10,750 11,000 20% 20% 20% Required units of available merchandise Units to be purchased References eBook & Resources Expanded table Learning Objective: 22-C2 Describe a master budget and the process of preparing it. Difficulty: Hard Learning Objective: 22-P1 Prepare each component of a master budget and link each to the budgeting process. Check my work 3. Monthly selling expense budgets. Learning Objective: 22-P2 Link both operating and capital expenditures budgets to budgeted financial statements. DIMSDALE SPORTS COMPANY Selling Expense Budget January, February, and March 2014 January February March Budgeted sales Sales commissions References eBook & Resources Expanded table Learning Objective: 22-C2 Describe a master budget and the process of preparing it. Difficulty: Hard Learning Objective: 22-P1 Prepare each component of a master budget and link each to the budgeting process. Check my work 4. Monthly general and administrative expense budgets. Learning Objective: 22-P2 Link both operating and capital expenditures budgets to budgeted financial statements. January Equipment - beginning of month $ February March 535,000 Equipment purchases Equipment - end of month DIMSDALE SPORTS CO. General and Administrative Expense Budget January, February, and March 2014 January February March rev: 04_30_2014_QC_49073, 05_19_2015_QC_CS-16007 References eBook & Resources Expanded table Learning Objective: 22-C2 Describe a master budget and the process of preparing it. Difficulty: Hard Learning Objective: 22-P1 Prepare each component of a master budget and link each to the budgeting process. Check my work 5. Monthly capital expenditures budgets. Learning Objective: 22-P2 Link both operating and capital expenditures budgets to budgeted financial statements. DIMSDALE SPORTS COMPANY Capital Expenditures Budget January, February, and March 2014 January February March Total References eBook & Resources Expanded table Learning Objective: 22-C2 Describe a master budget and the process of preparing it. Difficulty: Hard Learning Objective: 22-P1 Prepare each component of a master budget and link each to the budgeting process. Check my work 6. Monthly cash budgets. Learning Objective: 22-P2 Link both operating and capital expenditures budgets to budgeted financial statements. Calculation of Cash receipts from customers: January February March Sales in units Selling price per unit Total budgeted sales Cash sales 20% Sales on credit 80% ------------------Collected in-------------Total Accounts Receivable - January 1 $ January 520,000 $ 125,000 $ February March 31 March Receivable 395,000 Credit sales from: January 0 February 0 March 0 $ Total collection of receivables 125,000 $ 395,000 $ 0 $ 0 Total cash receipts from customers January February March January February March Collections of receivables Calculation of payments for merchandise: Desired ending inventory (units) Budgeted sales in units Total units required Beginning inventory (units) Number of units to be purchased Cost per unit Total cost of purchases ----------------Paid in--------------Total Accounts Payable - January 1 $ January 370,000 $ 70,000 $ February March 31 March Payable 300,000 Merchandise purchases in: January 0 February 0 March Total cash paid for merchandise 0 $ 70,000 $ 300,000 $ 0 $ 0 DIMSDALE SPORTS CO. Cash Budget January, February, and March 2014 January February March Beginning cash balance Total cash available Cash disbursements: 0 Total cash disbursements 0 0 Preliminary cash balance Ending cash balance Loan balance January February March Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month rev: 01_20_2014_QC_43790, 12_09_2014_QC_CS-418, 12_18_2014_QC_CS-418, 04_20_2015_QC_CS-14051 References eBook & Resources Expanded table Learning Objective: 22-C2 Describe a master budget and the process of preparing it. Difficulty: Hard Learning Objective: 22-P1 Prepare each component of a master budget and link each to the budgeting process. Check my work Learning Objective: 22-P2 Link both operating and capital expenditures budgets to budgeted financial statements. 7. Budgeted income statement for the entire first quarter (not for each month). DIMSDALE SPORTS CO. Budgeted Income Statement For Three Months Ended March 31, 2014 0 0 $ 0 rev: 07_19_2014_QC_51562, 03_19_2015_QC_CS-10782, 05_19_2015_QC_CS-16007 References eBook & Resources Expanded table Learning Objective: 22-C2 Describe a master budget and the process of preparing it. Difficulty: Hard Learning Objective: 22-P1 Prepare each component of a master budget and link each to the budgeting process. Check my work 8. Budgeted balance sheet as of March 31, 2014. Learning Objective: 22-P2 Link both operating and capital expenditures budgets to budgeted financial statements. DIMSDALE SPORTS CO. Budgeted Balance Sheet March 31, 2014 Assets 0 Liabilities and Equity Liabilities Bank loan payable Stockholders' Equity References eBook & Resources Expanded table Learning Objective: 22-C2 Describe a master budget and the process of preparing it. Difficulty: Hard Learning Objective: 22-P1 Prepare each component of a master budget and link each to the budgeting process. Check my work Learning Objective: 22-P2 Link both operating and capital expenditures budgets to budgeted financial statements