Problem 7-8AA Merchandising: Preparation of a complete master budget LO P4 (Need
ID: 2552077 • Letter: P
Question
Problem 7-8AA Merchandising: Preparation of a complete master budget LO P4
(Need required 6 calc, 6 cash bud, 7, and 8)
Near the end of 2017, the management of Dimsdale Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2017.
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Problem 7-8AA Merchandising: Preparation of a complete masterbudget LO P4 Near the end of 2017, the management of Dimsdale Sports Co., a merchandising company. prepared the following estimated balance sheet for December 31, 2017 DINSDALE SPORTS COMPANY Estimated Balance Sheet December 31, 2017 Assets Cash Accounts receivable s 36,000 525,000 150,890 s 711,00e Total current assets Equipment Less: accumulated depreciation 540 ,099 Equipment, net Total assets SE 472,500 $ 1,183,588 Liabiiities and Equity 360,800 15,900 90,000 Accounts payable Bank loan payable Taxes payable (due 3/15/2018) Total liabilities Common stock Retained earnings Total stockholders equity Total liabilities and equity 465,008 472,500 246 718,500 $ 1,183,500 To prepare a master budget for January, February, and March of 2018, management gathers the following information.Explanation / Answer
Answer a Sales Budget Jan Feb Mar Total Sales in Units 7,000.00 9,000.00 11,000.00 27,000.00 Sp Per Unit 55.00 55.00 55.00 55.00 Total Sales in $ 385,000.00 495,000.00 605,000.00 1,485,000.00 Cash Sales - 25% of Sales 96,250.00 123,750.00 151,250.00 371,250.00 Credit Sales - 75% of Sales 288,750.00 371,250.00 453,750.00 1,113,750.00 Answer b Schedule of Expected Cash Collections from Sales Jan Feb Mar Total Cash Sales 96,250.00 123,750.00 151,250.00 371,250.00 Collection from Accounts Receivables Accounts Receivable - Beg. Balance 125,000.00 400,000.00 525,000.00 Jan Sales - 173,250.00 115,500.00 288,750.00 Feb. Sales - - 222,750.00 222,750.00 Mar. Sales - - - - Total cash Collections 221,250.00 697,000.00 489,500.00 1,407,750.00 Answer c Merchandise Purchase Budget Jan Feb Mar Total Sales In units 7,000.00 9,000.00 11,000.00 27,000.00 Add: Closing Inventory in units 1,800.00 2,200.00 2,000.00 2,000.00 Total Needs 8,800.00 11,200.00 13,000.00 29,000.00 Less: opening Inventory in uints (5,000.00) (1,800.00) (2,200.00) (5,000.00) Required Purchases in Units 3,800.00 9,400.00 10,800.00 24,000.00 Price per Unit 30.00 30.00 30.00 30.00 Total Purchases in $ 114,000.00 282,000.00 324,000.00 720,000.00 Answer d Schedule of Cash payments to Suppliers Jan Feb Mar Total Cash Payment Accounts Payable - Beginning 80,000.00 280,000.00 - 360,000.00 Jan Purchases - 22,800.00 91,200.00 114,000.00 Feb Purchases - - 56,400.00 56,400.00 Mar Purchases - - - - Total Cash Payment to Suppliers 80,000.00 302,800.00 147,600.00 530,400.00 Answer e Selling & Admn. Budget Jan Feb Mar Total Sales Comm. - 20% of Sales 77,000.00 99,000.00 121,000.00 297,000.00 Fixed Sales Salaries 5,000.00 5,000.00 5,000.00 15,000.00 General & Admn. Salaries 12,000.00 12,000.00 12,000.00 36,000.00 Maint. Exp. 2,000.00 2,000.00 2,000.00 6,000.00 Dep. 6,000.00 7,000.00 7,300.00 20,300.00 Total 102,000.00 125,000.00 147,300.00 374,300.00 Calculation of Dep. Exp. Jan Feb Mar Total Equipment in the Beginning 5,625.00 5,625.00 5,625.00 16,875.00 Purch in Jan. 375.00 375.00 375.00 1,125.00 Purch in Feb 1,000.00 1,000.00 2,000.00 Purch in Mar 300.00 300.00 Total Dep. 6,000.00 7,000.00 7,300.00 20,300.00 Schedule of Cash payments of Selling & Admn. Budget Jan Feb Mar Total Sales Comm. - 20% of Sales 77,000.00 99,000.00 121,000.00 297,000.00 Fixed Sales Salaries 5,000.00 5,000.00 5,000.00 15,000.00 General & Admn. Salaries 12,000.00 12,000.00 12,000.00 36,000.00 Maint. Exp. 2,000.00 2,000.00 2,000.00 6,000.00 Total 96,000.00 118,000.00 140,000.00 354,000.00 Monthly Capital Expenditure Budget Jan Feb Mar Total Equipment Purchased 36,000.00 96,000.00 28,800.00 160,800.00 Land Purchased - - 150,000.00 150,000.00 Total Capital Expenditure 36,000.00 96,000.00 178,800.00 310,800.00 Cash budget Jan Feb Mar Total Opening cash Balance 36,000.00 30,100.00 210,300.00 36,000.00 Add: receipts Collection from Customers 221,250.00 697,000.00 489,500.00 1,407,750.00 Total Cash available 257,250.00 727,100.00 699,800.00 1,443,750.00 Less: Disbursements Cash Disbursement - Accounts Payable 80,000.00 302,800.00 147,600.00 530,400.00 Selling & Admn. Exp. 96,000.00 118,000.00 140,000.00 354,000.00 Purchase of Equipment 36,000.00 96,000.00 28,800.00 160,800.00 Purchase of Land - - 150,000.00 150,000.00 Income Tax Paid - - 90,000.00 90,000.00 Total Disbursement 212,000.00 516,800.00 556,400.00 1,285,200.00 Cash Balance Closing 45,250.00 210,300.00 143,400.00 158,550.00 Add: Finance from Bank - - Less: Payment to Bank (15,000.00) - - (15,000.00) Less: Payment of interet - Bank loan (150.00) - - (150.00) Net Cash Balance Closing 30,100.00 210,300.00 143,400.00 143,400.00 Income Statement For the Qtr Ending Mar-31, 2018 Sales 1,485,000.00 Less: Variable Cost Cost of Goods Sold 810,000.00 Sales Comm. - 20% of Sales 297,000.00 1,107,000.00 Contribution 378,000.00 Less: Fixed Cost Sales Salaries 15,000.00 General & Admn. Salaries 36,000.00 Maint. Exp. 6,000.00 Dep. 20,300.00 77,300.00 Operating Profit 300,700.00 Less: Interest Expenses 150.00 Net Income 300,550.00 Less: Income Tax - 40% 120,220.00 Net Income After Tax 180,330.00 Balance Sheet As on Mar 31 Assets Current Assets Cash 143,400.00 Accounts receivables 602,250.00 Inventory 60,000.00 805,650.00 Fixed Assets Equipment 540,000.00 Add: Addition during the Qtr. 160,800.00 Less: Dep. (87,800.00) 613,000.00 Land 150,000.00 Total Assets 1,568,650.00 Liabilities Accounts Payable 549,600.00 Income Tax Payable 120,220.00 Total liabilities 669,820.00 Shareholders's Equity Common Stock 472,500.00 Retained Earnings 426,330.00 Total Stockholders equity 898,830.00 Total liabilities & Stockholders' Equity 1,568,650.00 - Schedule of Retained Earnings Opening Balance 246,000.00 Add: net income 180,330.00 Less: Dividend declared - Closing Balance 426,330.00