Adia Davis Principles of Accounting 2: Summer 2018 - Accounting 206 Master Budge
ID: 2403330 • Letter: A
Question
Adia Davis
Principles of Accounting 2: Summer 2018 - Accounting 206
Master Budget Project
[The following information applies to the questions displayed below.]
Near the end of 2015, the management of Dimsdale Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2015.
To prepare a master budget for January, February, and March of 2016, management gathers the following information.
Dimsdale Sports’ single product is purchased for $20 per unit and resold for $55 per unit. The expected inventory level of 4,750 units on December 31, 2015, is more than management’s desired level for 2016, which is 20% of the next month’s expected sales (in units). Expected sales are: January, 6,750 units; February, 9,500 units; March, 10,750 units; and April, 9,500 units.
Cash sales and credit sales represent 20% and 80%, respectively, of total sales. Of the credit sales, 63% is collected in the first month after the month of sale and 37% in the second month after the month of sale. For the December 31, 2015, accounts receivable balance, $125,000 is collected in January and the remaining $395,000 is collected in February.
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, 2015, accounts payable balance, $80,000 is paid in January and the remaining $295,000 is paid in February.
Sales commissions equal to 20% of sales are paid each month. Sales salaries (excluding commissions) are $72,000 per year.
General and administrative salaries are $132,000 per year. Maintenance expense equals $2,100 per month and is paid in cash.
Equipment reported in the December 31, 2015, balance sheet was purchased in January 2015. 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, $33,600; February, $98,400; and March, $21,600. 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.
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.
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 $12,150 in each month.
The income tax rate for the company is 37%. Income taxes on the first quarter’s income will not be paid until April 15.
Prepare a master budget for each of the first three months of 2016; include the following component budgets:
rev: 04_21_2016_QC_CS-49613
1.
value:
15.00 points
Required information
Monthly sales budgets.
References
eBook & Resources
Expanded tableDifficulty: 3 HardLearning Objective: 22-P4 Appendix-Prepare each component of a master budget and link each to the budgeting process-for a merchandising company.
Check my work
2.
value:
15.00 points
Required information
Monthly merchandise purchases budgets.
References
eBook & Resources
Expanded tableDifficulty: 3 HardLearning Objective: 22-P4 Appendix-Prepare each component of a master budget and link each to the budgeting process-for a merchandising company.
Check my work
3.
value:
15.00 points
Required information
References
eBook & Resources
Expanded tableDifficulty: 3 HardLearning Objective: 22-P4 Appendix-Prepare each component of a master budget and link each to the budgeting process-for a merchandising company.
Check my work
4.
value:
15.00 points
Required information
Monthly general and administrative expense budgets.
References
eBook & Resources
Expanded tableDifficulty: 3 HardLearning Objective: 22-P4 Appendix-Prepare each component of a master budget and link each to the budgeting process-for a merchandising company.
Check my work
5.
value:
15.00 points
Required information
References
eBook & Resources
Expanded tableDifficulty: 3 HardLearning Objective: 22-P4 Appendix-Prepare each component of a master budget and link each to the budgeting process-for a merchandising company.
Check my work
6.
value:
15.00 points
Required information
Monthly cash budgets.
References
eBook & Resources
Expanded tableDifficulty: 3 HardLearning Objective: 22-P4 Appendix-Prepare each component of a master budget and link each to the budgeting process-for a merchandising company.
Check my work
7.
value:
15.00 points
Required information
Budgeted income statement for the entire first quarter (not for each month).
References
eBook & Resources
Expanded tableDifficulty: 3 HardLearning Objective: 22-P4 Appendix-Prepare each component of a master budget and link each to the budgeting process-for a merchandising company.
Check my work
8.
value:
15.00 points
Required information
Budgeted balance sheet as of March 31, 2016.
Master Budget Project
instructions | helpExplanation / Answer
Per Chegg guidelines, 4 sub-parts have been answered.
1 DIMSDALE SPORTS CO. Sales Budget For January, Februrary, and March 2016 Budgeted Unit Sales Budgeted Unit Price Budgeted Total Dollars January 6750 55 371250 February 9500 55 522500 March 10750 55 591250 Totals for the quarter 27000 1485000 2 DIMSDALE SPORTS CO. Merchandise Purchases Budget January, Februrary, and March 2016 January February March Next month's budgeted sales (units) 9500 10750 9500 Ratio of inventory to future sales 20% 20% 20% Desired ending inventory 1900 2150 1900 Budgeted sales units 6750 9500 10750 Required units of available merchandise 8650 11650 12650 Less beginning inventory 4750 1900 2150 Units to be purchased 3900 9750 10500 Purchase price per unit $ 20 20 20 Total budgeted merchandise purchases $ 78000 195000 210000 3 DIMSDALE SPORTS CO. Selling Expense Budget January, Februrary, and March 2016 January February March Budgeted sales $ 371250 522500 591250 Sales commission as percent of sales 20% 20% 20% Sales commissions $ 74250 104500 118250 Sales salaries 6000 6000 6000 Total budgeted selling expense $ 80250 110500 124250 4 January February March Equipment - beginning of month 576000 609600 708000 Equipment purchases 33600 98400 21600 Equipment - end of month 609600 708000 729600 Depreciation expense 6350 7375 7600 DIMSDALE SPORTS CO. General and Administrative Expense Budget January, Februrary, and March 2016 January February March General and administrative salaries 11000 11000 11000 Maintenance expense 2100 2100 2100 Depreciation expense 6350 7375 7600 Total budgeted general and administrative expense $ 19450 20475 20700Related Questions
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