Problem 7-8AA Merchandising: Preparation of a complete master budget LO P4 Near

Question

Problem 7-8AA Merchandising: Preparation of a complete master budget LO P4 Near the end of 2017, the management of Dimsdale Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2017 DIMSDALE SPORTS COMPANY Estimated Balance Sheet December 31, 2017 Assets $36,000 520,000 110,000 Cash Accounts receivable Inventory Total current assets Equipment Less: accumulated depreciation $ 666, 000 588,000 73,500 Equipment, net Total assets 514,500 $ 1,180,500 Liabilities and Equity Accounts payable Bank loan payable Taxes payable (due 3/15/2018) Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and equity $ 355,000 16,000 89,000 $460,000 472,000 248,500 720,500 $1,180,500 To prepare a master budget for January, February, and March of 2018, management gathers the following information

Explanation / Answer

Paid in March Total January February March 31 payable Accounts payable-January 1 355,000 75,000 280,000 Merchandise purchases in January 71000 14200 56800 February 190000 38000 152000 March 220,000 220,000 total cash paid for merchandise 836,000 75,000 294,200 94800 372,000

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