a Secure https/ ucation.com/flow/connect.html Budget Project Help Save &ExitSu;

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a Secure https/ ucation.com/flow/connect.html Budget Project Help Save &ExitSu; Near the end of 2017, the management of Dimsdale Sports Co, a merchandlsing company, prepared the following estimated sheet for December 31, 2017 50 ance Sheet Cash al current assets s 711, 540,000 Less: accumulated depreciatIon Equipment, net Total assets Liabilities and Equity Accounts payable Bank loan payable Taxes paable (due 3/15/2018) Total liabilieles 5 360,990 15,800 5 465,000 472,5e Retained earnings Total stockholders equity Total liab1lities and equity 3,183,5ee To prepare a master budget for January, February, and March of 2018, management gathers the following information. a. The company's single product is purchased for $30 per unit and resold for $55 per unit. The expected inventory level of 5,000 b. Cash sales and credit sales represent 25% and 75% respectively of total sales of the credit sales, 60% s collected n ne frst units on December 31, 2017 is more than management's desired leve, which is 20% of the next month's expected sales on unit Expected sales are: January, 7000 units; February, 9.000 units; March, 11000 units and April, 10.000 units month after the month of sale and 40% in the second month after the month of sale. For the December 31, 2017, accounts receivable balance, $125.000 is collected in January and the remaining $400,000 is collected in February n January ang the remaining 40000s Prev 1 of 1

Explanation / Answer

Answer: Requirement 1 Sales Budget Unit Unit Price Total January 7000 $                                     55.00 $             385,000.00 (7000*55) February 9000 $                                     55.00 $             495,000.00 (9000*55) March 11000 $                                     55.00 $             605,000.00 (11000*55) Total for the quarter 27000 $                                     55.00 $          1,485,000.00 Requirement 2 Merchandise Purchase Budget January February March Quarter Next month's Budgeted Sale (In Units)                          9,000                                       11,000                          10,000 Ratio of inventory to future sale 20% 20% 20% Budgeted Sales                          7,000                                         9,000                          11,000                          27,000 Add: Ending Inventory 20% of next month Sales (9000*20%; 11000*20%; 10000*20%)                          1,800                                         2,200                            2,000                             6,000 Total needs                          8,800                                       11,200                          13,000                          33,000 Less: Beginning inventory                          5,000                                         1,800                            2,200                             9,000 Units required for purchase                          3,800                                         9,400                          10,800                          24,000 Requirement 3 Selling expenditure Budget January February March Quarter Budgeted Sales                      385,000                                     495,000                        605,000                    1,485,000 Sales Commission as percentage of Sales 20% 20% 20% Sales Commission                  77,000.00                                 99,000.00                  121,000.00                        297,000 Sales Salaries (60,000/12)                          5,000                                         5,000                            5,000                          15,000 Total Selling expenditure                        82,000                                     104,000                        126,000                        312,000 Requirement 4 Equipment Beginning of the month $              40,000.00 $                             76,000.00 $             172,000.00 Equipment purchases $              36,000.00 $                             96,000.00 $                28,800.00 Equipment - end of the month $              76,000.00 $                          172,000.00 $             200,800.00 Monthly Depreciation $                    791.67 $                               1,791.67 $                  2,091.67 (76000/8/12) (172000/8/12) (200800/8/12) Monthly general expenditure budget January February March Quarter General and administrative salaries ($144,000/12) $              12,000.00 $                             12,000.00 $                12,000.00 $                36,000.00 Maintenance expense $                2,000.00 $                               2,000.00 $                  2,000.00 $                  6,000.00 Depreciation on Equipment $                    791.67 $                               1,791.67 $                  2,091.67 $                  4,675.00 Total monthly expenditure $              14,791.67 $                             15,791.67 $                16,091.67 $                46,675.00

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