[The following information applies to the questions displayed below.) Near the end of 2013, the management of Ramsey Clothing Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2013 RAMSEY CLOTHING COMPANY Estimated Balance Sheet December 31, 2013 Assets Cash $36,500 Accounts receivable 520,000 Inventory 110,000 666,500 Total current assets Equipment Less accumulated depreciation 538.000 67.250 Equipment, net 470,750 Total assets $ 1.137.250 Liabilities and Equity Accounts payable Bank loan payable Taxes payable (due 3/15/2014) $ 380,000 15,000 90,000 $ 485,000 475.000 Total liabilities Common stock Retained earnings Total stockholders equity 177250 652.250 Total abilities and equity $ 1.137.250 to search To prepare a master budget for January February, and March of 2014, management gathers the following information a. Ramsey Clothing single product is purchased for $20 per unit and resold for $57 per unit. The expected inventory level of 5,500 units on December 31, 2013. is more than management's desired level for 2014, which is 20% of the next month's expected sales (in units). Expected sales are: January 6,750 units: February, 8,500 units; March 11,000 units; and April 10,500 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, 2013, accounts receivable balance, S130.000 is collected in January and the remaining $390,000 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, 2013, 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 $48,000 per year. e. General and administrative salaries are $144.000 per year. Maintenance expense equals $1,900 per month and is paid in cash. f. Equipment reported in the December 31, 2013, balance sheet was purchased in January 2013. 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, $95,000, and March $28,500. 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 9. The company plans to acquire land 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. Ramsey Clothing 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 monthfend 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 $7.450 in each month 1. The income tax rate for the company is 37%. Income taxes on the first quarter's income will not be paid until April 15. Required: Prepare a master budget for each of the first three months of 2014: include the following component budgets to search lui 6. Monthly cash budgets. RAMSEY CLOTHING CO. Cash Budget January, February, and March 2014 January February March Beginning cash balance Total cash available Cash disbursements Total cash disbursements 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 Calculation of Cash receipts from customers: January February March Sales in units Selling price per unit Total budgeted sales Cash sales 20% Sales on credit 80% Collected in February March Total January 520,000 $ 130,000 Accounts Receivable - January 1 Credit sales from $ $ 390,000 January February March Total collection of receivables $ 130,000 Total cash receipts from customers January February March Collections of receivables Calculation of payments for merchandise: January February March Desired ending inventory (units) here to search O Cite LUA TULUI Opony Mom LAS OC qui income will not be paid until April 15. Required: Prepare a master budget for each of the first three months of 2014: include the following component budgets 7. Budgeted income statement for the entire first quarter (not for each month) RAMSEY CLOTHING CO. Budgeted Income Statement For Three Months Ended March 31, 2014 search 8. Budgeted balance sheet as of March 31, 2014. RAMSEY CLOTHING CO. Budgeted Balance Sheet March 31, 2014 Assets Liabilities and Equity Liabilities Bank loan payable Stockholders' Equity