DIMSDALE SPORTS COMPANY Balance Sheet December 31 Assets Cash Accounts receivable Inventory Equipment Total assets Less: Accumulated depreciation Liabilities and Equity $ 20,000 520,000 135,000 $ 600,000 75,000 525,000 $1,200,000 Liabilities Accounts payable $375,000 Loan payable 12,000 Taxes payable (due March 15) 90,000 477,000 $ 473,500 249,500 723,000 Equity Common stock Retained earnings Total liabilities and equity $ 1,200,000 To prepare a master budget for January, February, and March, use the following information. a. The company's single product is purchased for $30 per unit and resold for $56 per unit. The inventory level of 4,500 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, 7,250 units; February, 9,250 units; March, 11,250 units; and April, 10,000 units. All sales are on credit. b. Cash receipts from sales are budgeted as follows: January, $246,800; February, $718,078; March, $519,456. c. Cash payments for merchandise purchases are budgeted as follows: January, $65,000; February, $337,600; March, $168,300. d. Sales commissions equal to 20% of sales dollars are paid each month. Sales salaries (excluding commissions) are $5,500 per month. e. General and administrative salaries are $13,000 per month. Maintenance expense equals $2,100 per month and is paid in cash. f. New equipment purchases are budgeted as follows: January, $33,600; February, $96,000; and March, $28,800. Budgeted depreciation expense is January, $ 6,600; February, $7,600; and March, $7,900. 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. 1. The income tax rate for the company is 41%. 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 budget. 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Merchandise purchases budgets. Required 4 Required 5 Required 6 Required 7 Required 8 Next period budgeted sales units Ratio of inventory to future sales Desired ending inventory units Total required unite Units to be purchased Cost per unit Cost of merchandise purchases DIMSDALE SPORTS Merchandise Purchases Budget January February March Required 1 Required 3>

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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DIMSDALE SPORTS COMPANY
Balance Sheet
December 31
Assets
Cash
Accounts receivable
Inventory
Equipment
Total assets
Less: Accumulated depreciation
Liabilities and Equity
$ 20,000
520,000
135,000
$ 600,000
75,000
525,000
$1,200,000
Liabilities
Accounts payable
$375,000
Loan payable
12,000
Taxes payable (due March 15)
90,000
477,000
$ 473,500
249,500
723,000
Equity
Common stock
Retained earnings
Total liabilities and equity
$ 1,200,000
To prepare a master budget for January, February, and March, use the following information.
a. The company's single product is purchased for $30 per unit and resold for $56 per unit. The inventory level of 4,500 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, 7,250 units; February, 9,250 units; March, 11,250 units; and April, 10,000 units. All sales are on credit.
b. Cash receipts from sales are budgeted as follows: January, $246,800; February, $718,078; March, $519,456.
c. Cash payments for merchandise purchases are budgeted as follows: January, $65,000; February, $337,600; March, $168,300.
d. Sales commissions equal to 20% of sales dollars are paid each month. Sales salaries (excluding commissions) are $5,500 per
month.
e. General and administrative salaries are $13,000 per month. Maintenance expense equals $2,100 per month and is paid in cash.
f. New equipment purchases are budgeted as follows: January, $33,600; February, $96,000; and March, $28,800. Budgeted
depreciation expense is January, $ 6,600; February, $7,600; and March, $7,900.
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.
1. The income tax rate for the company is 41%. 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 budget.
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.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2 Required 3
Merchandise purchases budgets.
Required 4 Required 5 Required 6 Required 7
Required 8
Next period budgeted sales units
Ratio of inventory to future sales
Desired ending inventory units
Total required unite
Units to be purchased
Cost per unit
Cost of merchandise purchases
DIMSDALE SPORTS
Merchandise Purchases Budget
January
February
March
Required 1
Required 3>
Transcribed Image Text:DIMSDALE SPORTS COMPANY Balance Sheet December 31 Assets Cash Accounts receivable Inventory Equipment Total assets Less: Accumulated depreciation Liabilities and Equity $ 20,000 520,000 135,000 $ 600,000 75,000 525,000 $1,200,000 Liabilities Accounts payable $375,000 Loan payable 12,000 Taxes payable (due March 15) 90,000 477,000 $ 473,500 249,500 723,000 Equity Common stock Retained earnings Total liabilities and equity $ 1,200,000 To prepare a master budget for January, February, and March, use the following information. a. The company's single product is purchased for $30 per unit and resold for $56 per unit. The inventory level of 4,500 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, 7,250 units; February, 9,250 units; March, 11,250 units; and April, 10,000 units. All sales are on credit. b. Cash receipts from sales are budgeted as follows: January, $246,800; February, $718,078; March, $519,456. c. Cash payments for merchandise purchases are budgeted as follows: January, $65,000; February, $337,600; March, $168,300. d. Sales commissions equal to 20% of sales dollars are paid each month. Sales salaries (excluding commissions) are $5,500 per month. e. General and administrative salaries are $13,000 per month. Maintenance expense equals $2,100 per month and is paid in cash. f. New equipment purchases are budgeted as follows: January, $33,600; February, $96,000; and March, $28,800. Budgeted depreciation expense is January, $ 6,600; February, $7,600; and March, $7,900. 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. 1. The income tax rate for the company is 41%. 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 budget. 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Merchandise purchases budgets. Required 4 Required 5 Required 6 Required 7 Required 8 Next period budgeted sales units Ratio of inventory to future sales Desired ending inventory units Total required unite Units to be purchased Cost per unit Cost of merchandise purchases DIMSDALE SPORTS Merchandise Purchases Budget January February March Required 1 Required 3>
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