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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
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 3PORTS COMPANY Estinated Balance Sheet December 31, 2017 $ 37,000 520,000 142, 500 Accounts receivable Total current assets 5 699, 500 648,000 1,000 Les: accumlated depreciation 567,000 $ 1,266, 500 Equipment, net Total asset Liabilities ard Equity $ 355, 000 16,000 91,000 Aecounts payable Bank loan payable Taxes payable (due 3/15/201B) Total 1iabilities Common stoc 5 462,000 474, 500 30, 000 Total stoctholde uity Total liabilities and equity B04, 500 $ 1,266, 500 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 unlt and resold for $52 per unit. The expected Inventory level of 4,750 unlts 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, 7,250 unlts; February. 9,000 unlts; March, 11,250 unlts; and April, 10.000 unlts. b. Cash sales and credit sales represent 25% and 75%, respectively, of total sales. Of the credit sales, 61% Is collected in the first month after the month of sale and 39% in the second month after the month of sale. For the December 31, 2017, accounts recelvable 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, $85,000 Is pald In January and the remalning $270,000 Is pald In February. | d. Sales commissions equal to 20% of sales are paid each month. Sales salaries (excluding commissions) are $90,000 per year. e. General and administrative salarles are $144,000 per year. Malntenance expense equals $2100 per month and is pald In cash. f. Equipment reported In the December 31, 2017, balance sheet was purchased In January 2017. It Is belng depreclated over elght years under the stralght-lne method with no salvage value. The following amounts for new equipment purchases are planned In the coming quarter: January, $38.400; February. $100,800: and March, $21,600. This equipment will be depreclated under the stralght- line method over elght years with no salvage value. A full month's depreclatlon is taken for the month In which equlpment Is purchased. g. The company plans to buy land at the end of March at a cost of $170,000, whlch will be pald with cash on the last day of the month. h. The company has a working arrangement with lts bank to obtain additional loans as needed. The interest rate is 12% per year, and Interest Is pad 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 malntaln a minlmum ending cash balance of $24,690 at the end of each month. L The Income tax rate for the company is 39%. 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 selling expense budgets. 4. Monthly general and administrative expense budgets. 5. Monthly capltal 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 Complete this question by entering your answers in the tabs below. Required Required 6 Cash Bud Required Required 2 Required 3Required 4 Required 5 Required 7Required 8 Cal: Monthly sales budgets
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