Please help! Thank you.
Near the end of 2017, the management of LuLu Toy Co., a merchandising company, prepared the following estimated balance sheet for December 3,2017 LULU TOY COMPANY Estimated Balance Sheet December 31,2017 Liabilities and Equity Assets Cash Accounts receivable Inventory Total current assets Equipment Less accumulated 380,000 15,000 S36,500 Accounts payable 520,000 Bank loan payable 105,000 Taxes payable (due 661,500 Total liabilities 91,000 3/15/2018) $486,000 S536,000 67,000 Common stock 473,500 469,000 Retained earnings 171,000 reciation Total stockholders' equity Total liabilities and equity 644,500 S1,130,500 Total assets S1,130,500 To prepare a master budget for January, February, and March of 2018, management gathers the following information a. Lulu Toy Company's single product is purchased for S20 per unit and resold for $58 per unit. The expected inventory level of 5,250 units on December 31, 2017, is more than management's desired level for 2018, which is 20% of the next month's expected sales (in units). Expected sales are: January, 7,500 units. February, 9,500 units; March, 11,250 units; and Apil, 9,500 units b. Cash sales and credit sales represent 30% and 70%, respectively, of total sales. Of the credit sales, 66% is collected in the first month after the month of sale and 34% in the second month after the month of sale. For the December 31, 2017, accounts receivable balance, $120,000 is collected in January and the remaining $400,000 is collected in February 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, 2017, accounts payable balance, $90,000 is paid in January and the remaining $290,000 is paid in February d. Sales commissions equal to 20% of sales are paid each month. Sales salaries (excluding commissions) are e. General and administrative salaries are S132,000 per year. Maintenance expense equals $1,800 per month and is f. Equipment reported in the December 31, 2017, balance sheet was purchased in January 2017. It is being S60,000 per year paid in cash. 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, $95,000; and March, 30,000. 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. g. The company plans to acquire 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. Lulu Toy 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 $41,050 in each month. i. The income tax rate for the company is 34%. Income taxes on the first quarter's income will not be paid until April 15 Prepare a master budget for each of the first three months of 2018; include the following component budgets (show supporting calculations as needed directly behind that budget, and round amounts to the nearest dollar): 1) Monthly sales budgets (showing both budgeted unit sales and dollar sales). 2.) Monthly merchandise purchases budgets. Monthly selling expense budgets. .) 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, 2018
