Dimsdale Sports, a merchandising company, reports the following balance sheet at December 31. DIMSDALE SPORTS COMPANY Balance Sheet December 31 Assets Cash Accounts receivable Inventory Equipment Less: Accumulated depreciation Equipment, net Total assets Liabilities Liabilities and Equity Accounts payable Loan payable Taxes payable (due March 15) Equity $ 528,000 66,000 $ 375,000 13,000 88,000 $ 470,500 215,000 $ 22,000 520,000 157,500 462,000 $ 1,161,500 $ 476,000 Common stock Retained earnings Total stockholders' equity Total liabilities and equity To prepare a master budget for January, February, and March, use the following Information. 685,500 $ 1,161,500 a. The company's single product is purchased for $30 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, 7,250 units; February, 9,000 units; March, 10,500 units; and April, 10,500 units. All sales are on credit. b. Cash receipts from sales are budgeted as follows: January, $269,638; February, $738,403; March, $517,639. c. Cash payments for merchandise purchases are budgeted as follows: January, $60,000; February, $337,800; March, $147,000. d. Sales commissions equal to 20% of sales dollars are paid each month. Sales salaries (excluding commissions) are $6,000 per month. e. General and administrative salaries are $12,000 per month. Maintenance expense equals $2,000 per month and is paid in cash. 1. New equipment purchases are budgeted as follows: January, $36,000; February, $93,600; and March, $19,200. Budgeted depreciation expense Is January, $ 5,875; February, $6,850; and March, $7,050. g. The company budgets a land purchase at the end of March at a cost of $150,000, 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 $22,000 at the end of each month. 1. The Income tax rate for the company is 39%. Income taxes on the first quarter's Income will not be paid until April 15.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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need assistance with this cash budget

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.)
Beginning cash balance
Total cash available
Less: Cash payments for:
Total cash payments
Preliminary cash balance
DIMSDALE SPORTS CO.
Cash Budget
January
0
February
0
March
0
Transcribed Image Text: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.) Beginning cash balance Total cash available Less: Cash payments for: Total cash payments Preliminary cash balance DIMSDALE SPORTS CO. Cash Budget January 0 February 0 March 0
Dimsdale Sports, a merchandising company, reports the following balance sheet at December 31.
DIMSDALE SPORTS COMPANY
Balance Sheet
December 31
Assets
Cash
Accounts receivable
Inventory
Equipment
Less: Accumulated depreciation
Equipment, net
Total assets
Liabilities
Liabilities and Equity
Accounts payable
Loan payable
Taxes payable (due March 15)
Equity
$ 528,000
66,000
$ 375,000
13,000
88,000
$ 22,000
520,000
157,500
$ 470,500
215,000
462,000
$ 1,161,500
$ 476,000
Common stock
Retained earnings
Total stockholders' equity
Total liabilities and equity
To prepare a master budget for January, February, and March, use the following information.
685,500
$ 1,161,500
a. The company's single product is purchased for $30 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, 7,250 units; February, 9,000 units; March, 10,500 units; and April, 10,500 units. All sales are on credit.
b. Cash receipts from sales are budgeted as follows: January, $269,638; February, $738,403; March, $517,639.
c. Cash payments for merchandise purchases are budgeted as follows: January, $60,000; February, $337,800; March, $147,000.
d. Sales commissions equal to 20% of sales dollars are paid each month. Sales salaries (excluding commissions) are $6,000 per
month.
e. General and administrative salaries are $12,000 per month. Maintenance expense equals $2,000 per month and is paid in cash.
f. New equipment purchases are budgeted as follows: January, $36,000; February, $93,600; and March, $19,200. Budgeted
depreciation expense is January, $ 5,875; February, $6,850; and March, $7,050.
g. The company budgets a land purchase at the end of March at a cost of $150,000, 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 $22,000 at the end of each month.
1. The Income tax rate for the company is 39%. Income taxes on the first quarter's Income will not be paid until April 15.
Transcribed Image Text:Dimsdale Sports, a merchandising company, reports the following balance sheet at December 31. DIMSDALE SPORTS COMPANY Balance Sheet December 31 Assets Cash Accounts receivable Inventory Equipment Less: Accumulated depreciation Equipment, net Total assets Liabilities Liabilities and Equity Accounts payable Loan payable Taxes payable (due March 15) Equity $ 528,000 66,000 $ 375,000 13,000 88,000 $ 22,000 520,000 157,500 $ 470,500 215,000 462,000 $ 1,161,500 $ 476,000 Common stock Retained earnings Total stockholders' equity Total liabilities and equity To prepare a master budget for January, February, and March, use the following information. 685,500 $ 1,161,500 a. The company's single product is purchased for $30 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, 7,250 units; February, 9,000 units; March, 10,500 units; and April, 10,500 units. All sales are on credit. b. Cash receipts from sales are budgeted as follows: January, $269,638; February, $738,403; March, $517,639. c. Cash payments for merchandise purchases are budgeted as follows: January, $60,000; February, $337,800; March, $147,000. d. Sales commissions equal to 20% of sales dollars are paid each month. Sales salaries (excluding commissions) are $6,000 per month. e. General and administrative salaries are $12,000 per month. Maintenance expense equals $2,000 per month and is paid in cash. f. New equipment purchases are budgeted as follows: January, $36,000; February, $93,600; and March, $19,200. Budgeted depreciation expense is January, $ 5,875; February, $6,850; and March, $7,050. g. The company budgets a land purchase at the end of March at a cost of $150,000, 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 $22,000 at the end of each month. 1. The Income tax rate for the company is 39%. Income taxes on the first quarter's Income will not be paid until April 15.
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