Near the end of 2019, the management of Dimsdale Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2019 DIMSDALE SPORTS COMPANY Estimated Balance Sheet December 31, 2019 Assets Cash $ 37,000 Accounts receivable 520,000 Inventory 157,500 Total current assets $714.500 Tquipment 564,000 LOS: Accumulated depreciation 70,500 Equipment, net 493.500 Total assets $1,208,000 Liabilities and Equity Accounts payable $ 380,000 Bank loan payable 12.000 Taxes payable (due 3/15/2020) 92.000 Total liabilities $484.000 common stock 473,500 Retained earnings 250, 500 Total stockholders' equity 724.000 Total liabilities and equity 61,200.000 To prepare a master budget for January, Fobruary, and March of 2020, management gathers the following information RC a. The company's single product is purchased for $30 per unit and resold for $59 per unit. The expected inventory level of 5,250 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, 7,500 units; February, 8,750 units; March 10,750 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, 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 $70,000 is paid in January 2020 and the remaining $310,000 is paid in February 2020. 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 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, 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, $33,600; February $96,000; and March, $24,000. 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 9. The company plans to buy and at the end of March at a cost of $160,000, 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 $41,000 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 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. *60 Saved Check my work mode : This shows what is correct or incorrect for the work you have completed Monthly cash budgets. (Negative balances and Loan repayment amounts (if any) should be indicated with your final answers to the nearest whole dollar.) DIMSDALE SPORTS CO. March $ 223,499 525,285 748,784 Cash Budget January, February, and March 2020 January February Beginning cash balance $ 37,000 $ 46,005 Cash receipts from customers 235,625 733,144 Total cash available 272,625 779,149 Cash payments for: Merchandise 70,000 334,000 Sales commissions 96,000 110,750 Sales salaries 7,500 7,500 General & administrative 13,000 13,000 salaries Maintenance expense 14,900 14,900 Purchases of equipment 33,600 96,000 Purchase of land 0 0 Taxes payable 0 0 Interest on bank loan 120 0 150,900 134,350 7,500 13,000 14,900 24.000 160,000 92,000 0 O Total cash payments Preliminary cash balance Additional loan (loan repayment) Ending cash balance 235,120 58,005 (12,000) 46,005 576,150 223,499 0 596,650 172,633 0 $ 223,499 $ 172,633