Near the end of 2019, the management of Dimsdale Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2019. 15 points 95,000 eBook Print DIMSDALE SPORTS COMPANY Estimated Balance Sheet December 31, 2019 Assets Cash $ 35,500 Accounts receivable 520,000 Inventory Total current assets $ 650,500 Equipment 528,000 Less: Accumulated depreciation 66,000 Equipment, net 462,000 Total assets $1,112,500 Liabilities and Equity Accounts payable $360,000 Bank loan payable 13,000 Taxes payable (due 3/15/2020) 88,000 Total liabilities $ 461,000 Common stock 471,000 Retained earnings 180, 500 Total stockholders' equity 651,500 Total liabilities and equity $1,112,500 References 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 $57 per unit. The expected inventory level of 4,750 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 9,000 units; March 10,750 units; and April, 11,000 units. b. Cash sales and credit sales represent 20% and 80%, respectively, of total sales. Of the credit sales, 57% is collected in the first month after the month of sale and 43% 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, $60,000 is paid in January 2020 and the remaining $300,000 is paid in February 2020 2 aints after the month of purchase. For the December 31, 2019, accounts payable balance, $60,000 is paid in January 2020 and the remaining $300,000 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 $144,000 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 coming quarter January, $38,400; February, $103,200; and March $28,800. This equipment will be depreciated under the strai 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 land at the end of March at a cost of $145,000, which will be paid with cash on the last day of the mo h. The company has a working arrangement with its bank to obtain additional loans as needed. The interest rate is 12% per year, interest is paid at each month-end based on the beginning balance. Partial or full payments on these loans can be made on the day of the month. The company has agreed to maintain a minimum ending cash balance of $23,000 at the end of each month 1. The income tax rate for the company is 43%. Income taxes on the first quarter's income will not be paid until April 15. eBook Print eferences 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 experise 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 halaw eBook Required 1 Required 2 Required 3 Required 4 Required 5 Required 7 Required 8 Required 6 Required 6 Calc Cash Bud Print Monthly sales budgets. References DIMSDALE SPORTS CO. Sales Budget For January, February, and March 2020 Budgeted Unit Budgeted Budgeted Total Sales Unit Price Dollars January February March Totals for the quarter Required 2 > Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Calc Required 6 Cash Bud Required 7 Required 8 t Monthly merchandise purchases budgets. aces DIMSDALE SPORTS CO. Merchandise Purchases Budget January, February, and March 2020 January February 9,000 10,750 20% 20% Next month's budgeted sales (units) Ratio of inventory to future sales March 11,000 20% Required units of available merchandise Units to be purchased Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 6 Calc Cash Bud Required 7 Required 8 Print eferences Monthly selling expense budgets. DIMSDALE SPORTS COMPANY Selling Expense Budget January, February, and March 2020 January February Budgeted sales March Sales commissions Monthly general and admin Print February March January $ 528,000 Equipment - beginning of month Equipment purchases Equipment - end of month References DIMSDALE SPORTS CO. General and Administrative Expense Budget January, February, and March 2020 Required 8 Print Required 1 Required 7 Required 2 Required 3 Required 4 Required 5 Required 6 Required 6 Cash Bud Calc Monthly capital expenditures budgets. References DIMSDALE SPORTS COMPANY Capital Expenditures Budget January, February, and March 2020 January February March Total N January February March 5 olnts Sales in units Selling price per unit Total budgeted sales Cash sales Sales on credit 20% eBook -Collected in March 31 Total March Receivable Print $ 520,000 $ 125,000 $ 395,000 References Accounts Receivable - January 1 Credit sales from: January February March Total collection of receivables Total cash receipts from customers January February March Collections of receivables Calculation of payments for merchandise: January February March S 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 -Book Print arch 31 rences -Paid in Total January February 360,000 $ 60,000 $ 300,000 March Payable $ Accounts Payable - January 1 Merchandise purchases in: January February March Total cash paid for merchandise $ 60,000 points DIMSDALE SPORTS CO. Cash Budget January, February, and March 2020 January February March eBook Beginning cash balance Print Total cash available Cash payments for: References Total cash payments Preliminary cash balance Ending cash balance Loan balance January March February Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month Required 7 >