Near the end of 2017, the management of Dimsdale Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2017 $ 655,000 DIMSDALE SPORTS COMPANY Estimated Balance Sheet December 31, 2017 Assets Cash $ 35,000 Accounts receivable 520,000 Inventory 100,000 Total current assets Equipment 600,000 Less: accumulated depreciation 75,000 Equipment, net Total assets Liabilities and Equity Accounts payable $360,000 Bank loan payable 15,000 Taxes payable (due 3/15/2018) 89,000 Total liabilities Common stock 472,000 Retained earnings 244,000 Total stockholders' equity Total liabilities and equity 525,000 $1,180,000 $ 464,000 716,000 $ 1,180,000 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 $20 per unit and resold for $54 per unit. The expected inventory level of 5,000 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, 11,000 units, and April, 10,000 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, $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, $75,000 is paid in January and the remaining $285,000 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 $156,000 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 vears under the straiaht-line method with no salvage value. The following amounts for new equipment purc a amounts for new equipment purchases are planned in the coming quarter: January, $38,400; February, $91,200, and March, $28,800. 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 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 $36,800 at the end of each month. i. 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: 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 4 Required 5 Required 6 Realtimedia Required 5 Required 6 Calc Required 6 Cash Bud Required 7 Required 8 Required 7 Required 8 Monthly sales budgets. DIMSDALE SPORTS CO. Sales Budget For January, February, and March 2018 Budgeted Unit Budgeted Budgeted Total Sales Unit Price Dollars January February March Totals for the quarter Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Calc Required 6 Cash Bud Required 7 Required 8 Monthly merchandise purchases budgets. DIMSDALE SPORTS CO. Merchandise Purchases Budget January, February, and March 2018 January February 8,500 11,000 20% 20% Next month's budgeted sales (units) Ratio of inventory to future sales March 10,000 20% Required units of available merchandise Units to be purchased Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Calc Required 6 Cash Bud Required 7 Required 8 Monthly merchandise purchases budgets. DIMSDALE SPORTS CO. Merchandise Purchases Budget January, February, and March 2018 January February 8,500 11,000 20% 20% Next month's budgeted sales (units) Ratio of inventory to future sales March 10,000 20% Required units of available merchandise Units to be purchased Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Calc Required 6 Cash Bud Required 7 Required 8 Monthly selling expense budgets. DIMSDALE SPORTS COMPANY Selling Expense Budget January, February, and March 2018 January February March Budgeted sales Sales commissions Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Calc Required 6 Cash Bud Required 7 Required 8 Monthly general and administrative expense budgets. February March January $ 600,000 Equipment - beginning of month Equipment purchases Equipment - end of month DIMSDALE SPORTS CO. General and Administrative Expense Budget January, February, and March 2018 January February Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Calc Required 6 Cash Bud Required 7 Required 8 Monthly capital expenditures budgets. DIMSDALE SPORTS COMPANY Capital Expenditures Budget January, February, and March 2018 January February March Total 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 your 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% March 31 Receivable ------------------Collected in-------------- January March $ 130,000 $ 390,000 Total 520,000 Accounts Receivable - January $ Credit sales from: January February March Total collection of receivables $ 130,000 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 Loan balance January February March Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month DIMSDALE SPORTS CO. Budgeted Income Statement For Three Months Ended March 31, 2018 Operating expenses Total operating expenses DIMSDALE SPORTS CO. Budgeted Balance Sheet March 31, 2018 Assets Total current assets Equipment, net Total assets Liabilities and Equity Liabilities Bank loan payable Total liabilities Stockholders' Equity Total Stockholders' Equity