(Solved): Dimsdale Sports, a merchandising company, reports the following balance sheet at December 31 . a. ...

Dimsdale Sports, a merchandising company, reports the following balance sheet at December 31 . a. The company's single product is purchased for \( \$ 30 \) per unit and resold for \( \$ 55 \) per unit. The inventory level of 4,500 units on December 31 is more than management's desilred level, which is \( 20 \% \) of the next month's budgeted sales units. Eludgeted sales are January, 7,000 units; February, 8,750 units; March, 10,750 units; and April, 10,000 units. All sales are on credit. b. Cash receipts from sales are budgeted as follows: January, \( \$ 235,500 ; \) Februsry, \( \$ 714,160 ; \) March, \( \$ 489,321 \). c. Cash payments for merchandise purchases are budgeted as follows: January, \( \$ 65,000 \); February, \( \$ 310,500 ; \) March, \( \$ 156,900 \). d. Sales commissions equal to \( 20 \% \) of sales dollars are paid each month. Sales balarles fexcluding commissions) are \( \$ 4,000 \) per month. e. General and administrative salarles are \( \$ 11,000 \) per month. Maintenance expense equals \( \$ 1,900 \) per month and is paid in cash. f. New equlpment purchases are budgeted as follows: January, \( \$ 36,000 \); february, \( \$ 93,600 ; \) and March, \( \$ 24,000 \). Budgeted depreciation expense is January, \( \$ 7,000 \); February, \( \$ 7,975 \); and March, \$8.225. 9. The company budgets a land purchase at the end of March at a cost of \( \$ 170,000 \), which will be paid with cash on the last day of the month. h. The company has an agreement with its bank to obtain acidional loans as needed. The interest rate is 13. 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 malntains a minimum ending cash balance of \( \$ 20.500 \) at the end of each month. 1. The income tax rate for the company is \( 37 \% \). Income taxes on the first quarter's incorme will not be paid until Aptili 15 . Required: Prepare a master budget for the months of January, February, and March that has the following budgets: 1. Soles budgets. 2. Merchandise purchases budgets. 3. Selling expense budgets. 4. General and administrative expense budgets. Hint Depreciaton is included in the general and adininistrative budget for merchandisers. 5. Capital expenditures budgets. 6. Casit budgets. 7. Budgeted income statement for entire quarter \( ( \) not monthy) ended March 31 . 8. Budcheted balance sheet as of March 31 .