Dimsdale Sports, a merchandising company, reports the following balance sheet at December 31. DIMSDALE SPORTS COMPANY Balance Sheet December 31 Assets Cash $ 20,000 520,000 100,000 $ 600,000 75,000 Accounts receivable Inventory Equipment Less: Accumulated depreciation Total assets Liabilities and Equity Liabilities Accounts payable Loan payable Taxes payable (due March 15) 525,000 $ 1,165,000 $ 350,000 14,000 89,000 453,000 Equity Common stock Retained earnings Total liabilities and equity $ 470,000 242,000 712,000 $ 1,165,000 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 $59 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, 6,500 units; February, 9,000 units; March, 11,000 units, and April, 11,000 units. All sales are on credit. b. Cash receipts from sales are budgeted as follows: January, $235,050; February, $728,424; March, $528,198. c. Cash payments for merchandise purchases are budgeted as follows: January, $60,000; February, $303,200; March, $90,400. d. Sales commissions equal to 20% of sales dollars are paid each month. Sales salaries (excluding commissions) are $7,500 per month e. General and administrative salaries are $12,000 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, $91,200; and March, $26,400. Budgeted depreciation expense is January, $ 6,600; February, $7,550; and March, $7,825. g. The company budgets a land purchase at the end of March at a cost of $155,000, 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 $20,000 at the end of each month. i. 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 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. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Budgeted income statement for the entire first quarter (not for each month). (Round your final answers to the nearest whole dollar.) DIMSDALE SPORTS COMPANY Budgeted Income Statement For Three Months Ended March 31 Selling, general and administrative expenses Total operating 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 Budgeted balance sheet as of March 31. (Round your final answers to the nearest whole dollar.) DIMSDALE SPORTS COMPANY Budgeted Balance Sheet March 31 Assets Total assets Liabilities and Equity Liabilities Equity Total Liabilities and Equity 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 Budgeted balance sheet as of March 31. (Round your final answers to the nearest whole dollar.) DIMSDALE SPORTS COMPANY Budgeted Balance Sheet March 31 Assets Total assets Liabilities and Equity Liabilities Equity Total Liabilities and Equity