To prepare a master budget for January, February, and March, use the following information.

a$.$ The company's single product is purchased for $$20$ per unit and resold for $$57$ per unit. The inventory level of $5,250$ 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, $6,750$ units; February, $9,500$ units; March, $10,500$ units; and April, $10,000$ units. All sales are on credit.

b$.$ Cash receipts from sales are budgeted as follows: January, $$245,425$; February, $$705,965$; March, $$511,419.$

c$.$ Cash payments for merchandise purchases are budgeted as follows: January, $$65,000$; February, $$293,600$; March, $$93,200.$

d$.$ Sales commissions equal to $20\%$ of sales dollars are paid each month. Sales salaries $($excluding commissions$)$ are $$7,000$ per

month.

e$.$ General and administrative salaries are $$12,000$ per month. Maintenance expense equals $$1,900$ per month and is paid in cash.

f$.$ New equipment purchases are budgeted as follows: January, $$36,000$; February, $$96,000$; and March, $$21,600.$ Budgeted

depreciation expense is January, $$6,125$; February, $$7,125$; and March, $$7,350.$

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 $15.$

Required:

Prepare a master budget for the months of January, February, and March that has the following budgets:

Sales budget.

Merchandise purchases budgets.

Selling expense budgets.

General and administrative expense budgets. Hint: Depreciation is included in the general and administrative budget for

merchandisers.

Capital expenditures budgets.

Cash budgets.

Budgeted income statement for entire quarter $($not monthly$)$ ended March $31.$

Budgeted balance sheet as of March $31.$