Near the end of 2019, the management of Dimsdale Sports Co, a merchandising company, prepared the following estimated balance sheet for December 31, 2019 OSDALE SPORTS COMPANY Estimated Balance Sheet December 31, 2010 Assets Cash $36,500 Accounts receivable 520,000 Inventory 150,000 Total current assets $ 706,500 Equipment 528,000 Less: Accumulated depreciation 66.000 Equipment, net 462,000 Total assets 51,168,5 Llabilities and Equity Accounts payable $ 340,000 Bank loan payable 11.000 Taxes payable (due 3/15/2020) 38.000 Total liabilities $499.000 Common stock 470,500 Retained earning 259.000 Total stockholdersity 729,00 Total liabilities and culty $1,165,500 Prev 1 of 1 Next To Cloudy Search O 12 It 12 2 id 00 OD 27 S 36 * . 3 5 2 9 4 0 6 7 00 R T Y W U I 1 O P E D F G S I J L 1 ; B N 1 M / alt ctrl alt 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 $30 per unit and resold for $58 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 7,500 units, February 9,250 units; March 11,000 units and April 9,000 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, 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 570,000 is paid in January 2020 and the remaining $270,000 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 $144000 per year Maintenance expense equals $2,000 per month and is paid in cash 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, 598,400, and March $21600 This equipment will be depreciated under the straight line method over eight years with no salvage value Aut month's depreciation is taken for the month in which equipments purchased 9. The company plans to buy and at the end of March at a cost of $155,000, which will be paid with cash on the last day of the month n. The company has a working anagement with its bank to obtain additional loans as needed. The interest rate is 125 per year and Interest is paid each month end based on me beginning balance Partilor 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 L The income tax rate for the company is 37 Income taxes on the trut quarters income will not be paid until April 15 ? z C . V B N M / alt alt 2 ctrl 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 $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, 536,000; February, $98,400, and March, $21,600. 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 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 day of the month. The company has agreed to maintain a minimum ending cash balance of $40,000 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 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 Prev 1 of 1 HII Next 1:46 search o 78' Cloudy 5 FO Od res . % 2 4 5 6 7 8 9 0 W E R T Y U O P [ 1 : S D F G H J K L ; 7 V B N M 1 . olt alt 0 ctrl 1