Near the end of 2017, the management of Dimsdale Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2017 $ 698,000 DIMSDALE SPORTS COMPANY Estimated Balance Sheet December 31, 2017 Assets Cash $ 35,500 Accounts receivable 520,000 Inventory 142,500 Total current assets Equipment 528,000 Less: accumulated depreciation 66,000 Equipment, net Total assets Liabilities and Equity Accounts payable $370.000 Bank loan payable 14,000 Taxes payable (due 3/15/2018) 88,000 Total liabilities Common stock 474,000 Retained earnings 214,000 Total stockholders' equity Total liabilities and equity 462,000 $1,160,000 $ 472,000 688,000 $1. 160,000 To prepare a master budget for January, February, and March of 2018, management gathers the following information To prepare a master budget for January, February, and March of 2018, management gothers the following information a. The company's single product is purchased for $30 per unit and resold for $55 per unit. The expected Inventory level of 4.750 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, 7.250 units: February. 9,000 units; March, 11,250 units, and April 10,500 units. b. Cash sales and credit sales represent 25% and 75%, respectively, of total sales. Of the credit sales, 63% is collected in the first month after the month of sale and 37% in the second month after the month of sale. For the December 31, 2017, 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, 2017, accounts payable balance. $60,000 is paid in January and the remaining $310,000 is paid in February d. Sales commissions equal to 20% of sales are paid each month. Sales salaries (exciding commissions) are $84,000 per year. e. General and administrative salaries are $144,000 per year. Maintenance expense equals $1,900 per month and is paid in cash f. 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, $36,000; February, $100,800, and March, $26,400. This equipment will be depreciated under the straight- Ine method over eight years with no salvage value. A full 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 $145,000, 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 $44,000 at the end of each month. 1. The income tax rate for the company is 37%. 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: 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 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 Answer is not complete. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Calc Required 6 Cash Bud Required 7 Required 8 Calculate the budgeted cash receipts and cash payments. (Negative values should be indicated with minus sign. Round y final answers to the nearest whole dollar.) Calculation of Cash receipts from customers: January February March Sales in units Selling price per unit Total budgeted sales Cash sales Sales on credit 25% 75% March 31 Total January ------Collected in ...... February March $ 395,000 Receivable $ 520,000 $ 125,000 Accounts Receivable - January 1 Credit sales from: January February March Total collection of receivables $ 125,000 $ 395,000 $ 0 $ 0 Total cash receipts from customers January February March Collections of receivables Calculation of payments for merchandise: January February March 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 March 31 Payable ---Paid in February $ 310,000 March Total 270.00 370,000 Accounts Payable - January January $ 60,000 $ Merchandise purchases in: January February March Total cash paid for merchandise 60,000 $ 310,000 $ 0 Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Calc Required 6 Cash Bud Required 7 Required 8 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 Beginning cash balance lance $ 35,500 $ 49,398 Cash receipts from customers Total cash available Cash payments for: March 200,057 $ Total cash payments Preliminary cash balance Ending cash balance Loan balance January February tarch Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month Required 1 Required 2 Required 3 Required Required 6 Calc Required 6 Cash Bud Required 7 Required 8 Budgeted income statement for the entire first quarter dollar.) for each month). (Round your final answers to the neare DIMSDALE SPORTS CO. Budgeted Income Statement For Three Months Ended March 31, 2018 CE Sales II 881 $ Cost of goods sold ods sold Gross profit Operating expenses Sales commissions expense Sales salaries expense General administrative salarie Maintenance expense Depreciation expense Interest expense 302,500 21,000 36,000 5,700 58,500 / / / Total operating expenses 423,840 (423,840) $ (423,840) Required 1 Required 2 Required 3 Required 4 Required 5 Calc Cash Bud Required 7 Required 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 Assets Cash Accounts receivable 135,335 601,425 63,000 Total current assets $ 799,760 145,000 Land 691,200 124,500 566,700 $1,511,460 Equipment Accumulated depreciation Equipment, net Total assets Liabilities and Equity Liabilities Accounts payable Bank loan payable $ 559,800 97,554 657,354 Total liabilities Stockholders' Equity Common stock Retained earnings Total Stockholders' Equity Total Liabilities and Equity 474,000 380,106 854,106 $1,511,460