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    B::Ffib (' :: "' T'::Ffi I.Hx'Trt:L

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    Foyez Alam
    Dimsdale Sports provided estimated financial information for the end of 2008 and sales forecasts for early 2009. To prepare a master budget, the following budgets were made: monthly sales, merchandise purchases, selling expenses, general/administrative expenses, capital expenditures, cash budgets, quarterly income statement, and March 31, 2009 balance sheet. Budgets accounted for inventory levels, sales payment terms, purchase payment terms, salaries, maintenance costs, equipment purchases/depreciation, planned land acquisition, bank loan interest, and income taxes.

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    B::Ffib (' :: "' T'::Ffi I.Hx'Trt:L

    Uploaded by

    Foyez Alam
    23 views1 page
    Dimsdale Sports provided estimated financial information for the end of 2008 and sales forecasts for early 2009. To prepare a master budget, the following budgets were made: monthly sales, merchandise purchases, selling expenses, general/administrative expenses, capital expenditures, cash budgets, quarterly income statement, and March 31, 2009 balance sheet. Budgets accounted for inventory levels, sales payment terms, purchase payment terms, salaries, maintenance costs, equipment purchases/depreciation, planned land acquisition, bank loan interest, and income taxes.

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    MBA-T-2

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    Dimsdale Sports provided estimated financial information for the end of 2008 and sales forecasts for early 2009. To prepare a master budget, the following budgets were made: monthly sales, merchandise purchases, selling expenses, general/administrative expenses, capital expenditures, cash budgets, quarterly income statement, and March 31, 2009 balance sheet. Budgets accounted for inventory levels, sales payment terms, purchase payment terms, salaries, maintenance costs, equipment purchases/depreciation, planned land acquisition, bank loan interest, and income taxes.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    23 views1 page

    B::Ffib (' :: "' T'::Ffi I.Hx'Trt:L

    Uploaded by

    Foyez Alam
    Dimsdale Sports provided estimated financial information for the end of 2008 and sales forecasts for early 2009. To prepare a master budget, the following budgets were made: monthly sales, merchandise purchases, selling expenses, general/administrative expenses, capital expenditures, cash budgets, quarterly income statement, and March 31, 2009 balance sheet. Budgets accounted for inventory levels, sales payment terms, purchase payment terms, salaries, maintenance costs, equipment purchases/depreciation, planned land acquisition, bank loan interest, and income taxes.

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    © All Rights Reserved
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    of 1

    Near the end of 2008, the management of Dimsdale Sports co.

    , a merchandising
    company, prepared the
    following estimated balance sheet for December 31, 2b0g.

    Assets
    Cash
    $ 36,000
    Accounts receivable ...... 525,000
    lnventory I 50,000
    Total current assets . , 7 il,000
    Equipment $540,000
    Less accumulated depreciation ...... 67,500 472,500
    Total assets
    $ l, I 83,s00

    l-iabilities and Equity


    Accounts payable . $360,000
    .
    Bank loan payable . 15,000
    Taxes payable (due 3/15/2009) 90,000
    Total liabilities
    $ 46s,000
    Commonstock.. 47ZJOO
    Retainedearnings .. 246.000
    Total stockholders' equity
    7 I 8,500
    Total liabilities and equity
    $ 1, t 83,500

    To prepare a master budget for January, February,


    and March of 2009, management gathers the
    ing information. follow-
    , a. Dimsdale Sports, single^ product
    is purchased for $30 per unit and resold for
    i pected inventory level of 5,000 units $55 per unit. The ex-
    on December:t, 2008, is more ttrarmaiagement,s
    for 2009. which is ZOVi desired level
    nexr month,s expected sales (in ,ritrj. e*["t"d
    2!1te
    7,000 units; February, 9,000 unirs; March. sa]es are: January,
    11,0d0 unirs; and April.
    b' cash sales and credit sales represent 25vo and757o, rcspectively, 10,000 units.
    60vo is collected in the first month after the
    of total sales. of the credit sales,
    monrh of iale and"40%ir1tqr""ora month
    monrh of sale. For the.December 31,2008, after the
    January and the remaining $400,000 is collected --- --*-"--' vl
    ".*rr1.,*"f""uf"i^i#",tirr,oOo is collected in
    in February.
    c' Merchandise purchases are paid for as follows: 2ovo in thefirst
    month after the month of purchase
    and 807o in the second month after the month
    of purchase. r". tr," o*"*uer 31, 200g, accounts
    payable balance, $80,000 is paid in January
    and the remaining sz"ao,ooo prid in February.
    20vo or sales are paid each "
    ,n-*r,' sa", ,uiui.,
    "' ::B::ffib;['*;: 1"".rraing commis-
    t' salaries are $144,000 per
    ::ffi*;i.Hx'trT:l;: vear. Maintenance expense equals $2,000 per

    f'
    Equipment reported in the December 31, 200g,
    brT.-: sheet was purchased in January 200g. It is
    being depreciated over eight years under the.i*igl,r-tin"
    iowing amounts for new equipment purchases -"tr,oa'*itrr-ro-lauug" value. The fol-
    are.prannea in-the coming quarter: January,
    February' $96'000; and March, $zs,8oo. This $36,000;
    equipment wilr be a.pr..irl"Junaer the
    method over eight years with no salvage vatue. straighlline
    A full month's d"pr*il;;; taken for rhe month in
    which equipment is purchased
    g' The company plans to acquire land 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' Dimsdale sports has a working arangement with its bank to
    obtain additional Ioans as needed. The
    interest rate is 127a per y"ut, ,ndlnt"i"st paid;;
    is each month-end uu."Jo, tr,. beginning
    Partial or fulr payments on these loans can balance.
    6";;" on _the 1ast day of the ,r-rri,. rn" company has
    agreed to maintain a minimum ending cash
    barance of $25,000 in""u"t **tr,.
    i' The income tax rate for the company is 4|vo.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 200g; include the following component
    budgets (show supporting calcurations u,
    ,""4"0,-urJ iound amounts to ttre nearest aolar;:
    l ' Monthry sales budgets (showing both budgeted
    unit sares and dollar sares).
    2. Monthly merchandise purchases budgets.
    3. Monthly selling expense budgets.
    4. Monthly general and administrative expense budgets.
    5. Monthly capital expenditures budgets.
    6. Monthty cash budgets.
    7' Budgeted income statement for the entire first quarter (not
    for each month).
    8. Budgeted balance sheet as of March 3l, ZOOI.

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