Near the end of 2017, the management of Dimsdale Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2017 DIMSDALE SPORTS COMPANY Estimated Balance Sheet December 31, 2017 $ 36,500 counts receivable 520,000 Inventory 157,500 Total current assets $ 714,000 Equipment 564,000 Less: accumulated 70,500 depreciation Equipment, net 493,500 Total assets $1,207,500 Liabilities and Equity Accounts payable $360,000 Bank loan payable 14,000 Taxes payable (due 91.000 3/15/2018) Total liabilities $ 465,000 Common stock 471,000 Retained earnings 271,500 Total stockholders 742,500 equity Total liabilities and $1,207,500 equity To prepare a master budget for January, February, and March of 2018, management gathers the following information a. The company's single product is purchased for $30 per unit and resold for $56 per unit. The expected Inventory level of 5,250 units on December 31, 2017 is more than management's desired level, which is 20% of the next month's expected sales in units). Expected sales are: January, 7,500 units: February, 8.500 units; March 10.750 units: and April 9,500 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, 2017, 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, 2017, accounts payable balance. $70.000 is paid in January and the remaining $290,000 is paid in February d. Sales commissions equal to 20% of sales are paid each month. Sales salaries (excluding commissions) are $60,000 per year. e General and administrative salaries are $144,000 per year. Maintenance expense equals $2.000 per month and is paid in cash Equipment reported in the December 31, 2017, balance sheet was purchased in January 2017. 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, $31,200: February. $96.000; and March $21.500. This equipment will be depreciated under the straight-line method over eight years with no salvage value. A tu month's depreciation is taken for the month in which equipment is purchased. 9. The company plans to buy land at the end of March at a cost of $175,000, which will be paid with cash on the last day of the month h. The company 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 $53.160 at the end of each month. L 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 2018: include the following component budgets: 1. Monthly sales budgets 2. Monthly merchandise purchases budgets. 3. Monthly seleng expense budgets 4. Monthly general and administrative expense budgets 5. Monthly capital expenditures budgets. 6. Monthly cash budgets 7. Budgeted Income statement for the entire first quarter (not for each month). 8. Budgeted balance sheet as of March 31, 2018. Required Requir... Requir... Requir... Requir... Requir... Requir... Requir... Requir... 5 6 Calc 6 Cash 7 8 Monthly sales budgets. DIMSDALE SPORTS CO. Sales Budget For January, February, and March 2018 Budgeted BudgetedBudgeted Unit Total Unit Sales Price Dollars January February March Totals for the quarter Required Required 2 > Required Requir... Requir... Requir... Requir... Requir... Requir... Requir... Requir... 5 6 Calc 6 Cash 7 8 Monthly merchandise purchases budgets. DIMSDALE SPORTS CO. Merchandise Purchases Budget January, February, and March 2018 January February March Next month's budgeted sales 8,500 10.750 9.500 (units) Ratio of inventory to future sales 2 0% 20% 20% Required units of available merchandise Units to be purchased Required Requir... Requir... Requir... Requir... Requir... Requir... Requir... Requir... 5 6 Calc 6 Cash 7 8 Monthly selling expense budgets. DIMSDALE SPORTS COMPANY Selling Expense Budget January, February, and March 2018 January February March Budgeted sales Sales commissions Required Requir... Requir... Requir... Requir... Requir... Requir... Requir... Requir... 5 6 Calc 6 Cash 7 Monthly general and administrative expense budgets. January February March Equipment - beginning of S month 564,000 Equipment purchases Equipment - end of month DIMSDALE SPORTS CO. General and Administrative Expense Budget January, February, and March 2018 January February Required Requir... Requir... Requir... Requir... Requir... Requir... Requir... Requir... 1 2 3 4 5 6 Calc 6 Cash 7 8 Monthly capital expenditures budgets. DIMSDALE SPORTS COMPANY Capital Expenditures Budget January, February, and March 2018 January February March Required Requir... Requir... Requir... Requir... Requir... Requir... Requir... Requir... 6 Calc 6 Cash 2 Calculate the budgeted cash receipts and cash payments. (Negative values should t indicated with minus sign. Round your final answers to the nearest whole dollar.) February March Calculation of Cash receipts from customers: January Sales in units Selling price per unit Total budgeted sales Cash sales 25% Sales on credit Collected in March 31 March Receivable Total January S 520,000 $ 130,000 $ 390,000 Accounts Receivable- January 1 Credit sales from: January February March Total collection of receivables $ 130,000 Total cash receipts from customers January February March Collections of receivables February March Calculation of payments for merchandise: January 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 January February S 360,000 $ 70,000 $ 290,000 March 31 Payable March Accounts Payable- January 1 Merchandise purchases in: January February March Total cash paid for merchandise $ 70,000 Required Requir... Requir... Requir... Requir... Requir... Requir... Requir... Requir... 6 Calc 6 Cash Monthly cash budgets. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar.) DIMSDALE SPORTS CO. Cash Budget January, February, and March 2018 January February March Beginning cash balance Total cash available Cash payments for: Total cash payments Preliminary cash balance Ending cash balance February March Loan balance January Loan balance - Beginning of month Additional loan loan repayment) Loan balance - End of month Required Requir... Requir... Requir... Requir... Requir... Requir... Requir... Requir... 1 2 3 4 5 6 Calc 6 Cash 7 Budgeted income statement for the entire first quarter (not for each month). (Round you final answers to the nearest whole dollar.).... DIMSDALE SPORTS CO. Budgeted Income Statement For Three Months Ended March 31, 2018 Operating expenses Total operating expenses Required 6 Cash Bud Required 8 > Required Requir... Requir... Requir... Requir... Requir... Requir... Requir... Requir... 1 2 3 4 5 6 Calc 6 Cash 7 8 Budgeted balance sheet as of March 31, 2018. (Round your final answers to the nearest whole dollar.) DIMSDALE SPORTS CO. Budgeted Balance Sheet March 31, 2018 Total current assets Equipment, net Total assets Liabilities and Equity Llabilities Bank loan payable Total liabilities Stockholders' Equity Total Stockholders' Equity Total Liabilities and Equity