Near the end of 2013, the management of Dimsdale Sports Co., a merchand sing com
ID: 2466816 • Letter: N
Question
Near the end of 2013, the management of Dimsdale Sports Co., a merchand sing company, prepared the following estimated balance sheet for December 31, 2013 DIMSDALE SPORTS COMPANY Estimated Balance Sheet December 31, 2013 Assets Cash $ 36,500o Total current assets $ 538.000 691500 67,250 Equipment, net 470,750 Total assets $ 1162,250 Liabilities and Equity Accounts payable Bank loan payable Taxes payable (due 3/15/2014) $ 350,000 6,000 90,000 $ 456,000 Total llabilities Common stock Retained earnings 473,500 232,750 Total stockholders' equity 706,250 Total labilities and equity $ 1162,250 To prepare a master budget for January. February, and March of 2014, management gathers the fo owing a. Dimsdale Sports single product is purchased for $30 per unit and resoid for $55 per unit. The expected nventory level of 4,500 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, 6,500 units February, 8,500 unts, March, 11,000 units; and April, 10,000 units. b-Cash sales and credit sales represent 30% and 70%, respectively, of total sales. Of the credit sales, 57% is collected in the first month after the month of sale and 43% in the second month after the month of sale. For the December 31, 2013, accounts receivable balance, $130,000 is collected in January and the remaining $390,000 is collected in February.Explanation / Answer
Calculation of Cash Receipts from customers :
January
February
March
April
Sales in units (A)
6500
8500
11000
10000
Selling Price per unit (B)
$ 55
$ 55
$ 55
$ 55
Total budgeted Sales (C) = A*B
$ 357,500.00
$ 467,500.00
$ 605,000.00
$ 550,000.00
Cash Sales (30% *C)
$ 107,250.00
$ 140,250.00
$ 181,500.00
$ 165,000.00
Sales on credit (70% *C)
$ 250,250.00
$ 327,250.00
$ 423,500.00
$ 385,000.00
……………………..Collected in ……………………..
March. 31
Total
January
February
March
Receivables
Accounts Receivables - January 1
$ 520,000.00
$ 130,000.00
$ 390,000.00
Credit Sales from :
January
$ 250,250.00
$ 142,642.50
$ 107,607.50
(57%*250250)
(43%*250250)
February
$ 186,532.50
$ 186,532.50
$ 140,717.50
(57%*327250)
(43%*327250)
March
$ -
$ 241,395.00
Total Collection of Receivables
$ 956,782.50
$ 130,000.00
$ 532,642.50
$ 294,140.00
Total Cash Receipts from Customers
January
February
March
Cash Sales
$ 107,250.00
$ 140,250.00
$ 181,500.00
Collection of Receivables
$ 130,000.00
$ 532,642.50
$ 294,140.00
Total Cash Receipts from Customers
$ 237,250.00
$ 672,892.50
$ 475,640.00
Calculation of Payment for merchandise:
January
February
March
Desired ending inventory (units)
1700
2200
2000
(20% of next month’s sales units)
(20%*8500)
(20%*11000)
(20%*10000)
Add: Budgeted Sales in units
6500
8500
11000
Total Units Required
8200
10700
13000
Less: Beginning inventory (units)
4500
1700
2200
Number of units to be purchased
3700
9000
10800
Cost Per unit
30
30
30
Total Cost of Purchases
$ 111,000.00
$ 270,000.00
$ 324,000.00
……………………..Paid in ……………………..
March. 31
Total
January
February
March
Payable
Accounts Payable - January 1
$ 350,000.00
$ 70,000.00
$ 280,000.00
Merchandise Purchased in :
January
$ 111,000.00
$ 22,200.00
$ 88,800.00
(20%*111000)
(80%*111000)
February
$ 54,000.00
$ 54,000.00
$ 216,000.00
(20%*270000)
(80%*270000)
March
$ -
$ 324,000.00
Total Cash Paid for Merchandise
$ 515,000.00
$ 70,000.00
$ 302,200.00
$ 142,800.00
Calculation of Cash Receipts from customers :
January
February
March
April
Sales in units (A)
6500
8500
11000
10000
Selling Price per unit (B)
$ 55
$ 55
$ 55
$ 55
Total budgeted Sales (C) = A*B
$ 357,500.00
$ 467,500.00
$ 605,000.00
$ 550,000.00
Cash Sales (30% *C)
$ 107,250.00
$ 140,250.00
$ 181,500.00
$ 165,000.00
Sales on credit (70% *C)
$ 250,250.00
$ 327,250.00
$ 423,500.00
$ 385,000.00
……………………..Collected in ……………………..
March. 31
Total
January
February
March
Receivables
Accounts Receivables - January 1
$ 520,000.00
$ 130,000.00
$ 390,000.00
Credit Sales from :
January
$ 250,250.00
$ 142,642.50
$ 107,607.50
(57%*250250)
(43%*250250)
February
$ 186,532.50
$ 186,532.50
$ 140,717.50
(57%*327250)
(43%*327250)
March
$ -
$ 241,395.00
Total Collection of Receivables
$ 956,782.50
$ 130,000.00
$ 532,642.50
$ 294,140.00
Total Cash Receipts from Customers
January
February
March
Cash Sales
$ 107,250.00
$ 140,250.00
$ 181,500.00
Collection of Receivables
$ 130,000.00
$ 532,642.50
$ 294,140.00
Total Cash Receipts from Customers
$ 237,250.00
$ 672,892.50
$ 475,640.00
Calculation of Payment for merchandise:
January
February
March
Desired ending inventory (units)
1700
2200
2000
(20% of next month’s sales units)
(20%*8500)
(20%*11000)
(20%*10000)
Add: Budgeted Sales in units
6500
8500
11000
Total Units Required
8200
10700
13000
Less: Beginning inventory (units)
4500
1700
2200
Number of units to be purchased
3700
9000
10800
Cost Per unit
30
30
30
Total Cost of Purchases
$ 111,000.00
$ 270,000.00
$ 324,000.00
……………………..Paid in ……………………..
March. 31
Total
January
February
March
Payable
Accounts Payable - January 1
$ 350,000.00
$ 70,000.00
$ 280,000.00
Merchandise Purchased in :
January
$ 111,000.00
$ 22,200.00
$ 88,800.00
(20%*111000)
(80%*111000)
February
$ 54,000.00
$ 54,000.00
$ 216,000.00
(20%*270000)
(80%*270000)
March
$ -
$ 324,000.00
Total Cash Paid for Merchandise
$ 515,000.00
$ 70,000.00
$ 302,200.00
$ 142,800.00
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.