Prepare a budgeted balance sheet at december 31 2014

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Near the end of 2013, the management of Dimsdale Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2013.

DIMSDALE SPORTS COMPANY Estimated Balance Sheet

December 31, 2013 Assets

Cash $ 37,000 Accounts receivable 520,000 Inventory 105,000 Total current assets 662,000 Equipment $ 536,000 Less accumulated depreciation 67,000 Equipment, net 469,000 Total assets $ 1,131,000

Liabilities and Equity Accounts payable $ 345,000 Bank loan payable 16,000 Taxes payable (due 3/15/2014) 89,000

Total liabilities $ 450,000 Common stock 471,500 Retained earnings 209,500 Total stockholders’ equity 681,000 Total liabilities and equity $ 1,131,000

To prepare a master budget for January, February, and March of 2014, management gathers the following information. a. Dimsdale Sports’ single product is purchased for $20 per unit and resold for $53 per unit. The expected

inventory level of 5,250 units on December 31, 2013, is more than management’s desired level for 2014, which is 20% of the next month’s expected sales (in units). Expected sales are: January, 7,250 units; February, 8,700 units; March, 11,000 units; and April, 9,500 units.

b. Cash sales and credit sales represent 30% and 70%, respectively, of total sales. Of the credit sales, 61% is collected in the first month after the month of sale and 39% in the second month after the month of sale. For the December 31, 2013, accounts receivable balance, $125,000 is collected in January and the remaining $395,000 is collected in February.

c. Merchandise purchases are paid for as follows: 20% in the first month after the month of purchase and 80% in the second month after the month of purchase. For the December 31, 2013, accounts payable balance, $70,000 is paid in January and the remaining $275,000 is paid in February.

d. Sales commissions equal to 20% of sales are paid each month. Sales salaries (excluding commissions) are $66,000 per year.

e. General and administrative salaries are $144,000 per year. Maintenance expense equals $2,000 per month and is paid in cash.

f. Equipment reported in the December 31, 2013, balance sheet was purchased in January 2013. It is being depreciated over eight years under the straight-line method with no salvage value. The following amounts for new equipment purchases are planned in the coming quarter: January, $35,000; February, $97,000; and March, $28,500. This equipment will be depreciated under the straight-line method over eight years with no salvage value. A full month’s depreciation is taken for the month in which equipment is purchased.

g. The company plans to acquire land at the end of March at a cost of $175,000, which will be paid with cash on the last day of the month.

h. Dimsdale Sports has a working arrangement with its bank to obtain additional loans as needed. The interest rate is 12% per year, and interest is paid at each month-end based on the beginning balance. Partial or full payments on these loans can be made on the last day of the month. The company has agreed to maintain a minimum ending cash balance of $59,765 in each month.

Brendan BrustadBMAL 530: BMAL 530 - Fall D 2017 4

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6. value: 2.30 points Required information

7. value: 2.30 points Required information

i. The income tax rate for the company is 39%. Income taxes on the first quarter’s income will not be paid until April 15.

Required: Prepare a master budget for each of the first three months of 2014; include the following component budgets:

rev: 04_30_2014_QC_49073, 07_19_2014_QC_51562, 05_19_2015_QC_CS-16007

1. Monthly sales budgets.

Expanded table Learning Objective: 22-C2 Describe a master budget and the process of preparing it.

Learning Objective: 22-P2 Link both operating and capital expenditures budgets to budgeted financial statements.

Difficulty: Hard Learning Objective: 22-P1 Prepare each component of a master budget and link each to the budgeting process.

Check my work

2.

Monthly merchandise purchases budgets.

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8. value: 2.30 points Required information

9. value: 2.30 points Required information

Expanded table Learning Objective: 22-C2 Describe a master budget and the process of preparing it.

Learning Objective: 22-P2 Link both operating and capital expenditures budgets to budgeted financial statements.

Difficulty: Hard Learning Objective: 22-P1 Prepare each component of a master budget and link each to the budgeting process.

Check my work

3. Monthly selling expense budgets.

Expanded table Learning Objective: 22-C2 Describe a master budget and the process of preparing it.

Learning Objective: 22-P2 Link both operating and capital expenditures budgets to budgeted financial statements.

Difficulty: Hard Learning Objective: 22-P1 Prepare each component of a master budget and link each to the budgeting process.

Check my work

4. Monthly general and administrative expense budgets.

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10. value: 2.30 points Required information

rev: 04_30_2014_QC_49073, 05_19_2015_QC_CS-16007

Expanded table Learning Objective: 22-C2 Describe a master budget and the process of preparing it.

Learning Objective: 22-P2 Link both operating and capital expenditures budgets to budgeted financial statements.

Difficulty: Hard Learning Objective: 22-P1 Prepare each component of a master budget and link each to the budgeting process.

Check my work

5. Monthly capital expenditures budgets.

Expanded table Learning Objective: 22-C2 Describe a master budget and the process of preparing it.

Learning Objective: 22-P2 Link both operating and capital expenditures budgets to budgeted financial statements.

Difficulty: Hard Learning Objective: 22-P1 Prepare each component of a master budget and link each to the budgeting process.

Check my work

eBook & Resources

eBook & Resources

References

References

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11. value: 2.30 points Required information

12. value: 2.30 points Required information

6. Monthly cash budgets.

rev: 01_20_2014_QC_43790, 12_09_2014_QC_CS-418, 12_18_2014_QC_CS-418, 04_20_2015_QC_CS-14051

Expanded table Learning Objective: 22-C2 Describe a master budget and the process of preparing it.

Learning Objective: 22-P2 Link both operating and capital expenditures budgets to budgeted financial statements.

Difficulty: Hard Learning Objective: 22-P1 Prepare each component of a master budget and link each to the budgeting process.

Check my work

7. Budgeted income statement for the entire first quarter (not for each month).

eBook & ResourcesReferences

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13. value: 2.40 points Required information

rev: 07_19_2014_QC_51562, 03_19_2015_QC_CS-10782, 05_19_2015_QC_CS-16007

Expanded table Learning Objective: 22-C2 Describe a master budget and the process of preparing it.

Learning Objective: 22-P2 Link both operating and capital expenditures budgets to budgeted financial statements.

Difficulty: Hard Learning Objective: 22-P1 Prepare each component of a master budget and link each to the budgeting process.

Check my work

8. Budgeted balance sheet as of March 31, 2014.

Expanded table Learning Objective: 22-C2 Describe a master budget and the process of preparing it.

Learning Objective: 22-P2 Link both operating and capital expenditures budgets to budgeted financial statements.

Difficulty: Hard Learning Objective: 22-P1 Prepare each component of a master budget and link each to the budgeting process.

Check my work

eBook & Resources

eBook & Resources

References

References

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