Question

Near the end of 2017, the management of Dimsdale Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2017 DIMSDALE SPORTS COMPANY Estimated Balance Sheet December 31, 2817 Assets Cash Accounts receivable Inventory Total current assets Equipment Less: accumulated depreciation $ 36,588 52e,888 2,500 699,800 576,8e0 Equipment, net Total assets 504,888 $1,283,8e8 Liabilities and Equity Accounts payable Bank loan payable Taxes payable (due 3/15/2818) Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and equity $ 375,8ee 13,800 91,8e8 479,800 473,588 25e,588 724,808 $1,283,8e8 To prepare a master budget for January, February, and March of 2018, management gathers the following Information. a. The company's single product Is purchased for $30 per unit and resold for $56 per unit. The expected Inventory level of 4,750 units on December 31, 2017, is more than management's desired level, which is 20% of the next month's expected sales (in units). Expected sales are: January, 6,750 unlts; February, 8,500 units, March, 11,250 units, and April, 9,000 units. b. Cash sales and credit sales represent 20% and 80%, respectively, of total sales. Of the credit sales, 59% is collected in the first month after the month of sale and 41% in the second month after the month of sale. For the December 31, 2017, accounts receivable balance, $120,000 Is collected In January and the remalning $400,000 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, 2017, accounts payable balance, $65,000 Is pald In January and the remalning $310,000 is pald In February | d. Sales commissions equal to 20% of sales are paid each month. Sales salaries (excluding commissions) are $72,000 per year e. General and administrative salarles are $144,000 per year. Maintenance expense equals $2100 per month and is pald In cash. f. Equipment reported In the December 31, 2017, balance sheet was purchased In January 2017. It is belng depreclated over elght years under the stralght-line method with no salvage value. The following amounts for new equipment purchases are planned In the coming quarter: January, $33,600; February, $93,600; and March, $19,200. This equipment will be depreclated under the stralght lIne method over elght years with no salvage value. A full month's depreciation Is taken for the month In which equipment Is purchased. g. The company plans to buy land at the end of March at a cost of $140,000, which will be pald with cash on the last day of the month. h. The company has a working arrangement with its bank to obtain additional loans as needed. The interest rate is 12% per year, and Interest is pald at each month-end 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 malntaln a minimum ending cash balance of $20,000 at the end of each month. 1. The income tax rate for the company is 41%. Income taxes on the first quarters income will not be paid until April 15. Requlred Prepare a master budget for each of the first three months of 2018; Include the following component budgets 1. Monthly sales budgets. 2. Monthly merchandise purchases budgets. 3. Monthly selling expense budgets. 4. Monthly general and administrative expense budgets. 5. Monthly capital expenditures budgets. 6. Monthly cash budgets. 7. Budgeted Income statement for the entire first quarter (not for each month). 8. Budgeted balance sheet as of March 31, 2018. Complete this question by entering your answers in the tabs below. uired 6 Required 6 Required 7 Required Cash BudRequired7 Required 1 Required 2 Required 3 Required 4 Required 5 Monthly sales budgets. DIMSDALE SPORTS co Sales Budget For January, February, and March 2018 Budgeted Unit Budgeted Budgeted Total Unit Price Sales Dollars January February March Totals for the quarter Required 6Required Required 7 Required8 Required 1Required 2Required 3 Required 4Required 5 Calc Cash Bud Monthly merchandise purchases budgets. DIMSDALE SPORTS CO. Merchandise Purchases Budget January, February, and March 2018 March January February 8,500 9,000 Next month's budgeted sales (units) Ratio of inventory to future sales 11,250 20% 20% 20% Required units of available merchandise Units to be purchased equired 6 Cash Bud Required 6R Required 1 Required 2Required 3 Required 4 Required 7 Required 8 Required 5 Calc Monthly selling expense budgets. DIMSDALE SPORTS COMPANY Selling Expense Budget January, February, and March 2018 February January March Budgeted sales Sales commissions Required 6 Required 6 Required 1 Required 2 Required 3 Required 4Required 5 Required 7 Required 8 Monthly general and administrative expense budgets January February March Equipment beginning of month Equipment purchases Equipment end of month S 576,000 DIMSDALE SPORTS CO General and Administrative Expense Budget January, February, and March 2018 January February Required 6 Required Required Requi Required 1 Required 2 Required 3 Required 4Required 5 Calc Monthly capital expenditures budgets. DIMSDALE SPORTS COMPANY Capital Expenditures Budget January, February, and March 2018 January February March Total Required 6 Required 6 Required 1 Required 2 Required 3 Required 4 Required 5 Calc Cash BudReqired 7 Required s Calculate the budgeted cash receipts and cash payments. (Negative values should be indicated with minus sign. Round your final answers to the nearest whole dollar.) Calculation of Cash receipts from customers February January March Sales in units Selling price per unit Total budgeted sales Cash sales Sales on credit 20% March 31 TotalJanuary March Accounts Receivable . January 1| S 520.000 |S 120.000 |S 400,000 Credit sales from: January February March Total collection of receivables S 120,000 Total cash receipts from customers January February March Collections of receivables Calculation of payments for merchandise: January February March Desired ending inventory (units) Budgeted sales in units Total units required Beginning inventory (units) Number of units to be purchased Cost per unit Total cost of purchases Paid in March 31 TotalJanuary February March Payable Accounts Payable January 1 S 375,000S 65.000 is 310.000 Merchandise purchases in: January February March Total cash paid for merchandise 65,000 Monthly cash budgets. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar.) DIMSDALE SPORTS CO Cash Budget January, February, and March 2018 March January February Beginning cash balance Total cash available Cash payments for. Total cash payments Preliminary cash balance Ending cash balance Loan balance March January February Loan balance Beginning of month Additional loan (loan repayment) Loan balance End of month 6Required 7 Required 8 Required 6 Required Required 1 Required 2 Required 3 Required 4 Required5 Cash BudReq Budgeted income statement for the entire first quarter (not for each month). (Round your final answers to the nearest whole dollar.) DIMSDALE SPORTS CO Budgeted Income Statement For Three Months Ended March 31, 2018 Operating expenses Total operating expenses Required 6 Required 6 hud Required 7 Required 8 Required 1 Required 2 Required 3 Required 4 Required 5 Budgeted balance sheet as of March 31, 2018. (Round your final answers to the nearest whole dollar.) DIMSDALE SPORTS CO Budgeted Balance Sheet March 31, 2018 Assets Total current assets Equipment, net Total assets Liabilities and Equity Bank loan payable Total liabilities Stockholders Equity Total Stockholders' Equity Total Liabilities and Equity

Answer 1

Dimsdale Sports Co Sales Budget January February March Total Cash Credit Totals 75600 95200 126000 296800 302400 380800 504000 1187200 378000 476000 630000 1484000 Sales Collections January February March Total 120000 400000 December January February March Totals 520000 75600 178416 123984 378000 95200224672 319872 126000 126000 195600 673616 474656 1343872 Merchandise Purchases Budget January February March Total 8500 11250 26500 1800 10750 13050 28300 -4750 10800 23550 Sales Units 6750 1700 8450 -4750 3700 30 Ending Inventory 2250 1800 Beginning Inventory Purchase in units Cost per unit Total Purchases 1700 9050 30 2250 30 30 111000 271500 324000 706500 Merchandise Payments January February March Total December January February Totals 65000 310000 375000 22200 88800 111000 54300 54300 65000 332200 143100 540300

Payments of Other Expenses January February March Total Sales commissions @ 20% Sales Salaries General and administrative salaries Maintenance expense Totals 75600 95200 126000 296800 18000 12000 12000 12000 36000 2100 95700 115300 146100 357100 2100 2100 6300 Depreciation Expense January February March Total 18000 1050 1950 200 21200 December January February March Totals 350 350 350 975 200 7525 975 6350 7325 Cash Budget December 31, 2015 January February March Total 36500 37800 165516 36500 195600 673616 474656 1343872 232100 711416 640172 1380372 Opening Balance Sales Collections Disbursements: Purchases Payments of Other Expenses Equipment Purchased Taxes Paid Land Purchased Total Payments Excess/(Deficiency) 65000 332200 143100 540300 95700 115300 146100 357100 33600 98400 21600 153600 9100091000 140000 140000 194300 545900 541800 1282000 37800 165516 98372 98372 Financing Borrowing Repayment Interest Totals Ending Cash Balance 0 0 0 0 0 37800 165516 98372 98372

Income Statement For the Quarter Ending 31.3.2018 Sales Less: Opening Inventory Purchases Closing Inventory Gross Margin Operating Expenses: Sales commissions Sales Salaries General and administrative salaries Maintenance expense Depreciation Interest Expense Net Loss Less:Taxes @41% Net Income 1484000 142500 706500 54000 795000 689000 296800 18000 36000 6300 21200 0 378300 310700 127387 183313 Balancesheet March 31,2018 Assets Cash Accounts receivable Inventory Total current assets 98372 660128 54000 812500 Land Equipment Less accumulated depreciation Equipment, net 140000 729600 93200 636400 Total assets 1588900 Liabilities and Equity Accounts payable Income Tax Payable Bank Loan Payable Total liabilities Common stock Retained earnings Total stockholders' equity 541200 127387 13000 681587 473500 433813 907313 Total liabilities and equity 1588900