Problem 7-8AA Merchandising: Preparation of a complete master budget LO P4 The f
ID: 2547920 • Letter: P
Question
Problem 7-8AA Merchandising: Preparation of a complete master budget LO P4 The following information epplies to the questions displeyed below Near the end of 2015, the management of Dimsdale Sports Co, a merchandising company prepered the following estimated balance sheet for December 31. 2015. DIMSDALE SPORTS COMPANY Estimated Balance Sheet December 31. 2015 Assets Cash Accounts receivable Inventory $36.000 525.000 150.000 711.000 Total current assets Equipment Lees accumulated deprecation $540,000 67500 Equipment, net 472,500 Total assets $ 1183,500 Liabilities and Equity Accounts poyable Bank loon payable Taxes payable (due 3/15/2016) $360000 15.000 90,000 Total liabilities Common stock Retained earnings s 465.000 472.500 246,000 Total stockholders equity 718.500 Total nabilities and equityExplanation / Answer
Required Budgets are as prepared below:
Dimsdale Sports Co. Sales Budget For the quarter ended March 31 Month Particulars January February March Total Budgeted Unit sales 7,000 9,000 11,000 27,000 Sale Price 55 55 55 55 Budgeted sales 385,000 495,000 605,000 1,485,000 Credit Sales (75%) 288750 371250 453750 1113750 Dimsdale Sports Co. Schedule of expected Cash collections For the quarter ended March 31 Month Particulars January February March Total Beginning Accounts Receivable 125,000 400,000 525000 Cash Sales 96250 123750 151250 371250 January Credit sales 173,250 115,500 288750 February Credit Sales 222,750 222750 March Credit sales 0 Total collections 221,250 697,000 489,500 1,407,750 Account receivable for February Sale 148,500 Account receivable for March Sale 453,750 Dimsdale Sports Co. Merchandise Purchase Budget For the quarter ended March 31 Month Particulars January February March Total Budgeted Unit Sales 7,000 9,000 11,000 27,000 Add: Desired Ending merchandise inventory 1,800 2,200 2,000 2,000 Total needs 8,800 11,200 13,000 29,000 Less: beginning merchandise inventory 5,000 1,800 2,200 5,000 Required purchase 3,800 9,400 10,800 24,000 Unit Cost 30.0 30.0 30.0 30.0 Required dollar purchases $114,000 $282,000 $324,000 $720,000 Dimsdale Sports Co. Schedule of expected Cash payments For the quarter ended March 31 Month Particulars January February March Total Beginning Accounts Payable (a) $80,000 $280,000 $360,000 January Purchases (b) $22,800 $91,200 $114,000 February Purchases (c ) $56,400 $56,400 March Purchases (d) $0 Total payments (a+b+c+d) $80,000 $302,800 $147,600 $530,400 Accounts Payable for February purchase $225,600 Accounts Payable for March purchase $324,000 Dimsdale Sports Co. Commission For the quarter ended March 31 Month Particulars January February March Total Budgeted sales 385,000 495,000 605,000 1,485,000 Sales Commission (20% of sales) 77,000 99,000 121,000 297,000 Sales Salaries (60,000/12) 5,000 5,000 5,000 15,000 Dimsdale Sports Co. Administrative Exp For the quarter ended March 31 Month Particulars January February March Total General and administrative saleries (144,000/12) 12,000 12,000 12,000 36,000 Maintenance Expense 2,000 2,000 2,000 6,000 Cash Budget For the quarter ended March 31 Month Particulars January February March Total Beginning Cash balance 36,000 30,100 210,300 36,000 Add: Collection from customers $221,250 $697,000 $489,500 $1,407,750 cash available for use $257,250 $727,100 $699,800 $1,443,750 Less: cash Disbursements Merchandise purchase $80,000 $302,800 $147,600 $530,400 Sales commission $77,000 $99,000 $121,000 $297,000 Sales salaries $5,000 $5,000 $5,000 $15,000 General and administrative saleries (144,000/12) 12,000 12,000 12,000 36,000 Maintenance Expense 2,000 2,000 2,000 6,000 Equipment purchase 36,000 96,000 28,800 160,800 Land acquired 150,000 150,000 Taxes payable 90,000 90,000 Total disbusrement 212,000 516,800 556,400 1,285,200 Cash surplus/Deficit 45,250 210,300 143,400 158,550 Financing Borrowing 0 Repayment -15,000 -15,000 Interest -150 -150 Net cash from Financing -15,150 0 0 -15,150 Budgeted ending cash balance 30,100 210,300 143,400 143,400 Dimsdale Sports Co. Budgeted Income Statement For the quarter ended March 31 Particulars Amount ($) Amount ($) Sales 1,485,000 Less: Cost of goods sold (27,000*30) 810,000 Gross margin 675,000 Less: Selling and administartive exp Depreciation 20,300 Sales commission 297,000 Sales salaries 15,000 General and administrative saleries (144,000/12) 36,000 Maintenance Expense 6,000 Interest Expense 150 374,450 Net operating Income 300,550 Taxes payable (40%) 120,220 Net Income 180,330 Dimsdale Sports Co. Budgeted balance Sheet Mar-31 Assets Cash 143,400 Accounts Receivable 602,250 Inventory (2,000*30) 60,000 Land 150,000 Property and equipment 700,800 Less: Accumulated Depreciation -87,800 Total assets 1,568,650 Liabilities and Stockholders' Equity Accounts Payable purchases 549,600 Income taxes payable 120,220 Common Stock 472,500 Retained earnings 426,330 Total liabilities and stockholders' equity 1,568,650 Equipment December 31, 2015 540,000 Useful Life 8 years Per year Depreciation 67500 Monthly Depreciation 5625 January February March Equipment purchased 36,000 96,000 28,800 Useful Life 8 8 8 Per year Depreciation 4500 12000 3600 Monthly Depreciation 375 1000 300 January February March Total Monthly Depreciation 6000 7000 7300