Near the end of 2019, the management of Dimsdale Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2019.

To prepare a master budget for January, February, and March of 2020, management gathers the following information.

a. The companys 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 managements desired level, which is 20% of the next months expected sales (in units). Expected sales are January, 6,750 units; February, 9,000 units; March, 11,250 units; and April, 10,000 units.

b. Cash sales and credit sales represent 20% and 80%, 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, $120,000 is collected in January 2020 and the remaining $400,000 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 $295,000 is paid in February 2020.

d. Sales commissions equal to 20% of sales are paid each month. Sales salaries (excluding commissions) are $72,000 per year.

e. General and administrative salaries are $132,000 per year. Maintenance expense equals $2,200 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, $31,200; February, $100,800; and March, $21,600. This equipment will be depreciated under the straight-line method over eight years with no salvage value. A full months 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 $150,000, 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 $27,000 at the end of each month.

i. The income tax rate for the company is 37%. Income taxes on the first quarters 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.

$ 655,500 DIMSDALE SPORTS COMPANY Estimated Balance Sheet December 31, 2019 Assets Cash $ 35,500 Accounts receivable 520,000 Inventory 100,000 Total current assets Equipment 552,000 Less: Accumulated depreciation 69,000 Equipment, net Total assets Liabilities and Equity Accounts payable $ 355,000 Bank loan payable 13,000 Taxes payable (due 3/15/2020) 89,000 Total liabilities Common stock 471,000 Retained earnings 210,500 Total stockholders' equity Total liabilities and equity 483,000 $1,138,500 $ 457,000 681,500 $1,138,500 Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Calc Required 6 Cash Bud Required 7 Required 8 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 February Beginning cash balance $ 35,500 $ 32,100 X Cash receipts from customers 195,600 691,312 Total cash available 231,100 723,412 $ March 184,916 X 491,904 676,820 Cash payments for: Merchandise Purchase of land Purchases of equipment General & administrative salaries Maintenance expense Sales commissions 60,000 0 31,200 11,000 309,200 0 100,800 94,600 150,000 21,600 11,000 11,000 2,200 75,600 6,000 130 2,200 100,800 6,000 2,200 126,000 6,000 Sales salaries Interest on bank loan Taxes payable 89,000 186,130 530,000 500,400 Total cash payments Preliminary cash balance Additional loan (loan repayment) Ending cash balance (13,000) Loan balance February March Loan balance January $ 13,000 (13,000) Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month 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 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 Sales 1,512,000 540,000 Cost of goods sold Gross profit Operating expenses Sales commissions expense Sales salaries expense General administrative salaries $ 302,400 18,000 33,000 6,600 20,550 130 Maintenance expense Depreciation expense Interest expense Total operating expenses 380,680 Income before taxes Income tax expense Net income (380,680) 218,837 X $ (599,517) Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 required Required 6 Required 7 Required 8 Cash Bud 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 $ 83,816 | 653,184 40,000 Cash Accounts receivable Merchandise Inventory Total current assets Land Equipment $ 777,000 150,000 705,600 89,550 Accumulated depreciation Equipment, net 616,050 Total assets 1,543,050 $ 371,200 0 218,837 x Liabilities and Equity Liabilities Accounts payable Bank loan payable Income taxes payable Total liabilities Stockholders' Equity Common stock Retained earnings Total Stockholders' Equity 590,037 471,000 583,114 x 1,054,114 Total Liabilities and Equity 1,644,151