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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.

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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.

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Dimsdale Sports, a merchandising company, reports the following balance sheet at December 31. DIMSDALE SPORTS COMPANY Balance Sheet December 31 Assets Cash Accounts receivable $ 20,500 520,000 150,000 Inventory Equipment $636,000 79,500 Less: Accumulated depreciation Equipment, net 556,500 Total assets $ 1,247,000 Liabilities Accounts payable $ 340,000 Loan payable 12,000 Taxes payable (due March 15) 88,000 $ 440,000 Equity Common stock $ 473,500 Retained earnings 333,500 Total stockholders' equity 807,000 Total liabilities and equity $ 1,247,000 To prepare a master budget for January, February, and March, use the following information. Liabilities and Equity To prepare a master budget for January, February, and March, use the following information. a. The company's single product is purchased for $30 per unit and resold for $56 per unit. The inventory level of 5,000 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, 7,500 units; February, 8,500 units; March, 10,750 units; and April, 9,000 units. All sales are on credit. b. Cash receipts from sales are budgeted as follows: January, $251,000; February, $705,380; March, $496,944. c. Cash payments for merchandise purchases are budgeted as follows: January, $70,000; February, $295,200; March, $154,500. d. Sales commissions equal to 20% of sales dollars are paid each month. Sales salaries (excluding commissions) are $5,000 per month. e. General and administrative salaries are $12,000 per month. Maintenance expense equals $2,000 per month and is paid in cash. f. New equipment purchases are budgeted as follows: January, $38,400; February, $100,800; and March, $19,200. Budgeted depreciation expense is January, $7,025; February, $8,075; and March, $8,275. g. The company budgets a land purchase at the end of March at a cost of $145,000, 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 paid 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 $20,500 at the end of each month. i. The income tax rate for the company is 43%. Income taxes on the first quarter's income will not be paid until April 15. Merchandise purchases budgets. Beginning inventory (units) Calculation of Desired ending inventory Next period budgeted sales units Ratio of inventory to future sales Add: Desired ending inventory Total required units Less: Beginning inventory units Units to be purchased Cost per unit Cost of merchandise purchases DIMSDALE SPORTS Merchandise Purchases Budget January February 7,500 8,500 20% 1,700 6,800 $ 30 $ 8,500 10,750 20% 2,150 8,300 30 $ March 10,750 9,000 20% 1,800 7,200 30 $ 30 Selling expense budgets. Budgeted sales Sales commissions DIMSDALE SPORTS Selling Expense Budget January February March General and administrative expense budgets. Hint: Depreciation is included in the general and administrative budget for merchandisers. DIMSDALE SPORTS General and Administrative Expense Budget January February March Total Total gen. and admin. expenses Beginning cash balance Total cash available Less: Cash payments for: Total cash payments Preliminary cash balance Ending cash balance Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month Cash Budget January Loan balance January 0 February February 0 March March 0 Budgeted Income Statement For Three Months Ended March 31 Selling, general and administrative expenses Total operating expenses $ 0 0 0 Budgeted balance sheet as of March 31. (Round your final answers to the nearest DIMSDALE SPORTS CO. Budgeted Balance Sheet March 31 Assets Total current assets Equipment, Net 0 Total assets Liabilities and Equity Liabilities Total liabilities Stockholders' Equity Total Stockholders' Equity Total Liabilities and Equity Capital expenditures budgets. Total capital expenditures DIMSDALE SPORTS Capital Expenditures Budget January February March

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