Problem 22-8AA (Algo) Merchandising: Preparation of a complete master budget LO P4 Dimsdale Sports, a merchandising company, reports the following balance sheet at December 31. DIMSDALE SPORTS COMPANY Balance Sheet December 31 Assets Cash $ 21,000 Accounts receivable 520,000 Inventory 95,000 Equipment $ 612,000 Less: Accumulated depreciation 76,500 535,500 Total assets $1,171,500 Liabilities and Equity Liabilities Accounts payable 3 360,000 Loan payable 12,200 Taxes payable (due March 15) 89,000 461,000 Equity Common stock $.470,000 Retained earnings 240,500 719,500 Total Habilities and equity $ 1,171,500 To prepare a master budget for January, February, and March, use the following information a. The company's single product is purchased for $20 per unit and resold for $58 per unit. The inventory level of 4.750 units on December 31 is more than management's desired level , which is 20% of the next month's budgeted sales units Budgeted sales are January, 7000 units: February 9,000 units, March 10,750 units, and April 10,000 units. All sales are on credit b. Cash receipts from sales are budgeted as follows: January, $272,100, February $733,679 March $528,119 c. Cash payments for merchandise purchases are budgeted as follows January $65,000, February $311.200 March, S102,200. d. Sales commissions equal to 20% of sales dollars are paid each month Sales salaries (excluding commissions) are $5,500 per month e. General and administrative salaries are $12,000 per month Maintenance expense equals $2,100 per month and is paid in cash f. New equipment purchases are budgeted as follows: January, $38.400. February, $96,000, and March, $24,000 Budgeted depreciation expense is January, $ 6,775, February $7775, and March $8,025 g. The company budgets a land purchase at the end of March at a cost of $175,000, which will be paid with cash on the last day of the month h. The company has an agreement with its bank to obtain additional loans as needed. The interest rate is 1% per month and interest is pald at each month-end based on the beginning-month balance Partial or full payments on these loans are made on the last day of the month The company maintains a minimum ending cash balance of $21.000 at the end of each month 1. The income tax rate for the company is 39% Income taxes on the first quarter's income will not be paid until April 15 Required: Prepare a master budget for the months of January, February, and March that has the following budgets 1. Sales budgets 2. Merchandise purchases budgets. 3. Selling expense budgets. 4. General and administrative expense budgets. Hint. Depreciation is included in the general and administrative budget for merchandisers. 5. Capital expenditures budgets. 6. Cash budgets 7. Budgeted income statement for entire quarter (not monthly ended March 31, 8. Budgeted balance sheet as of March 31, Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Sales budgets. DIMSDALE SPORTS Sales Budget January February March Totals Budgeted sales units Selling price per unit Total budgeted sales Amani Required 2 > Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required Required 8 Merchandise purchases budgets. DIMSDALE SPORTS Merchandise Purchases Budget January February March Next period budgeted sales units Ratio of inventory to future sales Desired ending inventory units Total required units Units to be purchased Cost per unit Cost of merchandise purchases Required 1 Required 2 Required 3 GOEDE Required 4 Required 5 Required 6 Required 7 Selling expense budgets. DIMSDALE SPORTS Selling Expense Budget January February March Budgeted sales Sales commissions Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Requit General and administrative expense budgets. Hint: Depreciation is included in the general and administrativ- merchandisers. DIMSDALE SPORTS General and Administrative Expense Budget January February March Total Total general and administrative expenses Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Requir Capital expenditures budgets. DIMSDALE SPORTS Capital Expenditures Budget January February March Total capital expenditures Cash Budget January February March Beginning cash balance Total cash available Less: Cash payments for Total cash payments Preliminary cash balance Ending cash balance Loan balance January February March Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month DIMSDALE SPORTS COMPANY Budgeted Income Statement For Three Months Ended March 31 Selling, general and administrative expenses Total operating expenses Budgeted balance sheet as of March 31. (Round your final answers to the n DIMSDALE SPORTS COMPANY Budgeted Balance Sheet March 31 Assets Total assets Liabilities and Equity Liabilities Equity Total Liabilities and Equity