Near the end of 2013, the management of Dirmsdale Sports Co, a merchandising com
ID: 2463683 • Letter: N
Question
Near the end of 2013, the management of Dirmsdale Sports Co, a merchandising company, prepared the following estimated balance sheet for December 31, 2013. SPORTS Estimated Balance Sheet 31, Assets Cash Accounts receivable Inventory $ 35,500 520,000 95,000 Total current assets Equipment Less accumulated depreciation 650,500 $ 537,000 67,125 Equipment, net 469,875 Total assets $ 1,120.375 Liablities and Equity Liabilities and Equity Accounts payable Bank loan payable Taxes payable (due 3/15/2014) 375,000 15,000 92,000 $ 482,000 Total liabilities Common stock Retained earnings 470,500 67,875 Total stockholders equity 638,375 Total liabilities and equity $ 1,120,375 To prepare a master budget for January. February, and March of 2014, management gathers the following nformation a. Dimsdale Sports' single product is purchased for $20 per unit and resold for $53 per unit The desired expected inventory level of 4,750 units on December 31, 2013, is more than management's level for 2014, which is 20% of the next month's expected sales (in units) Expected sales are: January 7,500 units, February, 8,700 units March 11.000 units; and April 10,500 units Cash sales and credit sales represent 30% and 70s, respectively, of total sales of the credit sales, 65 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 recevable balance, $125.000 is colected in January and the remaining $395.000 is collected in FebruryExplanation / Answer
Income statement for the First quarter
Particulars Amount
Sales $1,441,600
Less:
Cost of Goods Sold = $591,600
___________________________
Gross Profit= $850,000
Less:
Sales Commission $288,320
Salaries=$21,000(84,000*3*12=$21,000)
General And Admin = $33,000($132,000 * 3/12=$33,000)
Maintenance Exp=$5,700(1,900*3=$5,700
Depreciation=$3,479.94
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Net Profit Before Tax=$498,500
Calculation
Sales
Monthly Sales Budgets
Particulars Budgeted Unit Sales Budgeted Unit Price Budgeted Total
January 7,500 $53 $397,500
February 8,700 $53 $461,100
March 11,000 $53 $583,000
_____________________________________________________________
Totals for the quarter $1,441,600
_____________________________________________
Cost of Goods Budget
Jan= 4,750 + 7,500 - 1,740 (8,700 *20/100=1,740)=10,510 * $20=$210,200
Feb= 1,740 +8,700 - 2,200(11,000*20/100=2,200)=7,970* $20=$159,400
March = 2,200 + 11,000 - 2100) (10,500*20/100=2100)=$11100*$20=$222,000
__________________________________________________________
total = $591,600
__________________________________________________________-
Sales Commission=20% of sales
Jan = 7500 *$53= $397,500 * 20/100=$79,500
Feb = 8,700 * $53 = $461,100 *20/100=92,220
Mar= 11,000 * $53 = $583,000 *20/100=$116,600
__________________________________________
Total =$288,320
__________________________________________
Depreciation
Jan =$37,000 / 8=$4,625/12=385.42=385.42
Feb =$97,000 / 8=$12,125/12=$1010.42 + 385.42=$1395.84
March=$29,000/8=$3,625 /12=$302.08+$1010.42 + 385.42=$1698.68
________________________________________________________
Total= $3,479.94
______________________________________________________
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