Near the end of 2019, the management of Dimsdale Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2019. $ 656,000 DIMSDALE SPORTS COMPANY Estimated Balance Sheet December 31, 2019 Assets Cash $ 36,000 Accounts receivable 520,000 Inventory 100,000 Total current assets Equipment 624,000 Less: Accumulated depreciation 78,000 Equipment, net Total assets Liabilities and Equity Accounts payable $ 355,000 Bank loan payable 12, eee Taxes payable (due 3/15/2020) 88,000 Total liabilities Common stock 472,500 Retained earnings 274,500 Total stockholders' equity Total liabilities and equity 546,000 $ 1,202,000 $ 455,000 747,00 $ 1,202,000 To prepare a master budget for January, February, and March of 2020, management gathers the following information. a. The company's single product is purchased for $20 per unit and resold for $56 per unit. The expected inventory level of 5,000 units on December 31, 2019, is more than management's desired level, which is 20% of the next month's expected sales (in units). Expected sales are January, 7,000 units; February, 9,500 units; March, 11,250 units; and April, 9,000 units. 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, 2019, accounts receivable balance, $125,000 is collected in January 2020 and the remaining $395,000 is collected in February 2020. 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, 2019, accounts payable balance, $65,000 is paid in January 2020 and the remaining $290,000 is paid in February 2020. d. Sales commissions equal to 20% of sales are paid each month. Sales salaries (excluding commissions) are $84.000 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, 2019, balance sheet was purchased in January 2019. 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, $96,000; and March, $26,400. 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 $155,000, 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 g. The company plans to buy land at the end of at a cost of $155,000, 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 $40,000 at the end of each month. i. 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 2020; 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, 2020. Complete this question by entering your answers in the tabs below. Required 7 Required 8 Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 6 Calc Cash Bud Monthly general and administrative expense budgets. January $ 624,000 February March Equipment - beginning of month Equipment purchases Equipment - end of month DIMSDALE SPORTS CO. General and Administrative Expense Budget January, February, and March 2020 January February March Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 6 Required 7 Required 8 Cash Bud Monthly capital expenditures budgets. DIMSDALE SPORTS COMPANY Capital Expenditures Budget January, February, and March 2020 January February March Total Calculation of Cash receipts from customers: Sales in units March 11,250 58.00 Selling price per unit Total budgeted sales Cash sales January February 7,000 9,500 $ 58.00 $ 58.00 $ $ 392,000 $ 532,000 $ 98,000 133,000 $ 294,000 $ 399,000 $ 25% 75% 630,000 157.500 472,500 Sales on credit March 31 -Collected in Total January February 520,000 $ 125,000 $ 395,000 March Receivable $ 294,000 $ 0 Accounts Receivable - January 1 Credit sales from: January February March Total collection of receivables 179,340 $ $ 114.680 $ 243,390 399,000 472,500 155,610 472,500 628.110 $ 125,000 $ 574,340 $ 358,050 $ Current month's cash sales Collections of receivables Total cash receipts Total cash receipts from customers January February $ 98,000 $ 133,000 $ 125,000 574,340 $ 223,000 $ 707,340 $ March 157,000 358,050 515,050 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 January February $ 1,900 $ 2,250 $ $ 7,000 $ 9,500 $ 8.900 11,750 5,000 1,900 3,900 9,850 $ 20 $ 20 $ $ 78,000 $ 197,000 $ March 1,800 11,250 13.050 2.250 10.800 20 216,000 March 31 -Paid in Total January February 355,000 $ 65,000 $ 290,000 March Payable $ 15,600 $ 0 Accounts Payable - January 1 Merchandise purchases in: January February March Total cash paid for merchandise 78,000 197,000 216,000 62.400 $ 39,400 157,600 216,000 373,600 $ 65,000 $ 305,600 $ 101,800 $ - Required 5 Required 6 Cash Bud Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 5 Required 7 Required 8 Cash Bud Calc February NICE 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 2020 January Beginning cash balance $ 36,00 Cash receipts from customers 223,000 707,340 515.000 Total cash available 259,000 Cash payments for: Merchandise 78,000 197,000 216,000 Sales commissions 78,400 106,400 126,000 Sales salaries 7,000 7,000 7,000 General & administrative salaries 13,000 13,000 13,000 Maintenance expense 2.000 2.000 2,000 Taxes payable Purchases of equipment 36,000 96,000 26,400 Purchase of land 155,000 Interest on bank loan 0 0 0 214,400 421,400 546,400 Total cash payments Preliminary cash balance Ending cash balance Loan bulance January February Marci. Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month Requirea D CAIC Required 7 > Budgeted income statement for the entire first quarter (not for each month). (Round your final answers to the nearest whole dollar.) DIMSDALE SPORTS CO. Budgeted Income Statement For Three Months Ended March 31, 2020 Operating expenses Total operating expenses 0 0 $ 0 Budgeted balance sheet as of March 31, 2020. (Round your final answers to the nearest whole dollar.) DIMSDALE SPORTS CO. Budgeted Balance Sheet March 31, 2020 Assets Total current assets 0 Equipment, net Total assets Liabilities and Equity Liabilities Bank loan payable Total liabilities Stockholders' Equity Total Stockholders' Equity Total Liabilities and Equity RE Required 1 Required 2 Required 3 Required 4 Required 5 Monthly sales budgets. DIMSDALE SPORTS CO. Sales Budget For January, February, and March 2020 Budgeted Unit Budgeted Budgeted Total Sales Unit Price Dollars January 7,000 $ 56 392,000 February 9,500 56 532,000 March 11,250 56 630,000 Totals for the quarter 27,750 1,554,000 Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 6 Calc Cash Bud Required 7 Required 8 Monthly merchandise purchases budgets. March Total Next month's budgeted sales (units) Ratio of inventory to future sales Budgeted ending inventory (units) Budgeted units sales for month Required units of available merchandise Beginning inventory (units) Units to be purchased Budgeted cost per unit Budgeted merchandise purchases DIMSDALE SPORTS CO. Merchandise Purchases Budget January, February, and March 2020 January February 9,500 11,250 20% 20% 1,900 2.250 7,000 9,500 8,900 11,750 5,000 1,900 3,900 9,850 $ 20 S 20 $ 78,000 $ 197,000 9,000 20% 1,800 11,250 13,050 2,250 10,800 20$ 216,000 $ 24,550 $ 20 491,000 $ Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 6 Calc Cash Bud Require Monthly selling expense budgets. Total Budgeted sales Sales commission percent Sales commissions Sales salaries Total budgeted selling expenses DIMSDALE SPORTS COMPANY Selling Expense Budget January, February, and March 2020 January February $ 392,000 $ 532,000 $ 20% 20% 78,400 106,400 7,000 7,000 S 85,400 $ 113,400 $ March 630,000 20% 126,000 $ 7,000 133,000 $ 310,800 21,000 331,800