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

a The companys single product is purchased for $30 per unit and resold for $58 per unit. The inventory level of 5,500 units on December 31 is more than managements desired level, which is 20% of the next months budgeted sales units. Budgeted sales are January, 6,750 units; February, 9,000 units; March, 10,750 units; and April, 9,500 units. All sales are on credit.

b Cash receipts from sales are budgeted as follows: January, $242,450; February, $718,771; March, $516,824.

c Cash payments for merchandise purchases are budgeted as follows: January, $70,000; February, $313,300; March, $129,300.

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 $11,000 per month. Maintenance expense equals $2,200 per month and is paid in cash.

f New equipment purchases are budgeted as follows: January, $33,600; February, $98,400; and March, $21,600. Budgeted depreciation expense is January, $ 6,975; February, $8,000; and March, $8,225.

g The company budgets a land purchase at the end of March at a cost of $165,000, 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 39%. Income taxes on the first quarters 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.

**for requirement 6, ignore the numbers. ot was another problem but the format

is the same.

Problem 7-8AA (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 $ 20,500 Accounts receivable 520,000 Inventory 165,000 Equipment $ 636,000 Less: Accumulated depreciation 79,500 556,500 Total assets $ 1,262,000 Liabilities and Equity Liabilities Accounts payable $ 365,000 toan payable 13,000 Taxes payable (due March 15) 89,000 467,000 Equity Common stock $ 471,000 Retained earnings 324,000 795,000 Total liabilities and equity $ 1,262,000 To prepare a master budget for January, February, and March, use the following information Sales budgets. DIMSDALE SPORTS Budgeted sales units Selling price per unit Sales Budget January February 6,750$ 9,000 $ 58 $ 58 $ 391,500 $ 522,000 March 10,750 58 623,500 Totals 26,500 $ 174 X $ 4,611,000 $ Total budgeted sales $ DIMSDALE SPORTS Merchandise Purchases Budget January February March Budgeted sales units Next period budgeted sales units Ratio of inventory to future sales Desired ending inventory units Total required units Less: Beginning inventory units Units to be purchased Cost per unit Cost of merchandise purchases R Required 7 Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Selling expense budgets. DIMSDALE SPORTS Selling Expense Budget January February March Budgeted sales Sales commission percent Sales commissions Sales salaries Total selling expenses SIS Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 RO General and administrative expense budgets. Hint: Depreciation is included in the general and administr merchandisers. March Total DIMSDALE SPORTS General and Administrative Expense Budget January February General and administrative salaries Maintenance Depreciation Total general and administrative expenses Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 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 March Total February General and administrative salaries Maintenance Depreciation Total general and administrative expenses Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 ALEX Required 7 Capital expenditures budgets. DIMSDALE SPORTS Capital Expenditures Budget January February March Equipment purchases Land purchase Total capital expenditures March Cash Budget January February $ 20,500 $ 50,380 243,900 721,019 264.400 771 399 $ 252,699 520,351 773,050 60,000 40.800 298,800 98,400 Beginning cash balance Add: Cash receipts from sales Total cash available Less: Cash payments for Merchandise purchases Purchases of equipment Purchase of land General and administrative salaries Maintenance Sales commissions Sales salaries Loan interest Taxes 0 0 12,000 2.000 82,600 4,500 120 12.000 2.000 103,000 $ 4,500 91,200 19,200 175,000 12,000 2.000 129,800 4,500 0 91.000 0 0 Total cash payments Preliminary cash balance Additional loan (loan repayment) Ending cash balance 518,700 252,699 202,020 62,380 (12,000) 50,380 524.700 248,350 0 $ 248,350 $ $ 252,699 Loan balance January $ 12.000 49,000 S 61.000 Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month $ February $ 61,000 0 $ 61.000 March 61,000 0 61,000 $ DIMSDALE SPORTS COMPANY Budgeted Income Statement For Three Months Ended March 31 Sales Cost of goods sold Gross profit Selling, general and administrative expenses Sales commissions expense Sales salaries expense General administrative salaries expense Maintenance expense Depreciation expense Loan interest expense 0 Total operating expenses Income before income taxes 0 Income taxes expense $ Net income 0 DIMSDALE SPORTS COMPANY Budgeted Balance Sheet March 31 Assets Cash Accounts receivable Inventory 0 Total assets Liabilities and Equity Liabilities Accounts payable Income taxes expense Equity 0 0 Total Liabilities and Equity