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 $ 36,000 Accounts receivable 520,000 Inventory 150,000 Total current assets $ 706,000 Equipment 600,000 Less: Accumulated depreciation 75,000 Equipment, net 525,000 Total assets $ 1,231,000 Liabilities and Equity Accounts payable $ 350,000 Bank loan payable 12,000 Taxes payable (due 3/15/2020) 91,000 Total liabilities $ 453,000 Common stock 474,500 Retained earnings 303,500 Total stockholders equity 778,000 Total liabilities and equity $ 1,231,000 To prepare a master budget for January, February, and March of 2020, management gathers the following information. The companys single product is purchased for $30 per unit and resold for $55 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, 6,500 units; February, 8,750 units; March, 11,500 units; and April, 9,000 units. 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, $125,000 is collected in January 2020 and the remaining $395,000 is collected in February 2020. 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 $280,000 is paid in February 2020. Sales commissions equal to 20% of sales are paid each month. Sales salaries (excluding commissions) are $90,000 per year. General and administrative salaries are $144,000 per year. Maintenance expense equals $2,100 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, $93,600; and March, $28,800. 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. The company plans to buy land at the end of March at a cost of $170,000, which will be paid with cash on the last day of the month. 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 $16,000 at the end of each month. 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.

$ 706,000 DIMSDALE SPORTS COMPANY Estimated Balance Sheet December 31, 2019 Assets Cash $ 36,000 Accounts receivable 520,000 Inventory 150,000 Total current assets Equipment 600,000 Less: Accumulated depreciation 75,000 Equipment, net Total assets Liabilities and Equity Accounts payable $350,000 Bank loan payable 12,000 Taxes payable (due 3/15/2020) 91,000 Total liabilities Common stock 474,500 Retained earnings 303,500 Total stockholders' equity Total liabilities and equity 525,000 $1,231,000 1 $ 453,000 778,000 $1,231,000 Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Calc Required 6 Cash Bud Required 7 Required 8 Calculate the budgeted cash receipts and cash payments. (Negative values should be indicated with minus sign. Round your final answers to the nearest whole dollar.) Calculation of Cash receipts from customers: Sales in units Selling price per unit Total budgeted sales Cash sales Sales on credit January 6,500 | $ 55.00 $ 357,500 71,500 $ 286,000 February 8,750 $ 55.00 $ 481,250 96,250 $ 385,000 $ $ March 11,500 55.00 632,500 126,500 506,000 20% 80% $ -----------------Collected in-------------- January February March $ 125,000 $ 395,000 March 31 Receivable Total 520.000 Accounts Receivable - January $ Credit sales from: January 286,000 $ 180,180 $ $ $ 105,820 242,550 February 142,450 385,000 506,000 March Total collection of receivables 506,000 648,450 $ 125,000 $ 575,180 $ 348,370 $ Total cash receipts from customers 506,000 March Total collection of receivables 506,000 648,450 $ 125,000 $ 575,180 $ 348,370 $ Current month's cash sales Collections of receivables Total cash receipts Total cash receipts from customers January February | $ 71,500 $ 96,250 $ 125,000 575,180 $ 196,500 $ 671,430 $ March 126,500 348,370 474,870 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 $ 1,750 $ 2,300 $ $ 6,500 $ 8,750 $ 8,250 11,050 5,000 1.750 3,250 9,300 Is 30$ 30 $ $ 97,500 $ 279,000 $ March 1,800 11,500 13,300 2.300 11,000 30 330,000 -------------Paid in------------ January February March $ 70,000 $ 280,000 March 31 Payable Total 350,000 $ Accounts Payable - January 1 Merchandise purchases in: $ 1,730 $ $ 1,750 6,500 8,250 | $ Desired ending inventory (units) Budgeted sales in units Total units required Beginning inventory (units) $ $ 2,300 8,750 11,050 1,800 11,500 13,300 5,000 1,750 2,300 Number of units to be purchased Cost per unit Total cost of purchases $ $ 3,250 - 30 $ 97,500 $ 9,300 30 $ 279,000 $ 11,000 30 330,000 ----------------Paid in---------- January February $ 70,000 $ 280,000 March 31 Payable Total 350,000 March $ Accounts Payable - January 1 Merchandise purchases in: January 19,500 $ $ 97,500 279,000 78,000 55,800 February March 330,000 223,200 330,000 553,200 Total cash paid for merchandise $ 70,000 $ 299,500 $ 133,800 $ Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 RE 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 your final answers to the nearest whole dollar.) DIMSDALE SPORTS CO. Cash Budget January, February, and March 2020 January February March Beginning cash balance $ 36,000 Cash receipts from customers 196,500 665,710| 472,890 Total cash available 232,500 Cash payments for: Merchandise I 70,000 299,500 133,800 Purchase of land 170,000 Purchases of equipment 36,000 93,600 28,800 General & administrative salaries 12,000 12,000 12,000 Maintenance expense 2,100 2,100 2,100 Sales commissions 71,500 96,250 126,500 Sales salaries 7,500 7,500 Interest on bank loan 12000 Taxes payable 01 01 9 1,000 199,220 510,950 571,700 Total cash payments Preliminary cash balance Purchase of land Purchases of equipment General & administrative salaries Maintenance expense Sales commissions Sales salaries Interest on bank loan Taxes payable 36,000 12,000 2,100 71,5001 7,500 120 of ol 93,600 12.000 2,100 96,250 7,500 0 op 170,000 28,800 12.000 2,100 126,500 7,500 0 91,000 199,220 510,950 571,700 Total cash payments Preliminary cash balance Additional loan (loan repayment) Ending cash balance (12,000) February March Loan balance January / $ 12,000 (12,000) Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month 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.) $ 1,471,250 802,500 668,750 DIMSDALE SPORTS CO. Budgeted Income Statement For Three Months Ended March 31, 2020 Sales Cost of goods sold Gross profit Operating expenses Sales commissions expense $ 294,250 Sales salaries expense 22,500 General administrative salaries 36,000 Maintenance expense 6,300 Depreciation expense 22,125 Interest expense 120 Total operating expenses Income before taxes Income taxes payable Net income 381,295 287,455 106,358 181,097 $ PAwrads Cash Bud Required > Check n DIMSDALE SPORTS CO. Budgeted Balance Sheet March 31, 2020 Assets 150,000 $ 150,000 170,000 Cash Accounts receivable Merchandise Inventory Total current assets Land Equipment Accumulated depreciation Equipment, net Total assets Liabilities and Equity Liabilities Accounts payable Bank loan payable Income taxes payable Total liabilities Stockholders' Equity Common stock Retained earnings Total Stockholders' Equity Total Liabilities and Equity