Near the end of 2019, the management of Dimsdale Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2019.

DIMSDALE SPORTS COMPANY Estimated Balance Sheet December 31, 2019
Assets
Cash	$	36,000
Accounts receivable		520,000
Inventory		95,000
Total current assets				$	651,000
Equipment		624,000
Less: Accumulated depreciation		78,000
Equipment, net					546,000
Total assets				$	1,197,000
Liabilities and Equity
Accounts payable	$	380,000
Bank loan payable		11,000
Taxes payable (due 3/15/2020)		90,000
Total liabilities				$	481,000
Common stock		472,500
Retained earnings		243,500
Total stockholders equity					716,000
Total liabilities and equity				$	1,197,000

To prepare a master budget for January, February, and March of 2020, management gathers the following information.

1. The companys 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, 2019, is more than managements desired level, which is 20% of the next months expected sales (in units). Expected sales are January, 7,000 units; February, 9,250 units; March, 10,750 units; and April, 10,500 units.
2. Cash sales and credit sales represent 20% and 80%, respectively, of total sales. Of the credit sales, 61% 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, 2019, accounts receivable balance, $125,000 is collected in January 2020 and the remaining $395,000 is collected in February 2020.
3. 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, 2019, accounts payable balance, $65,000 is paid in January 2020 and the remaining $315,000 is paid in February 2020.
4. Sales commissions equal to 20% of sales are paid each month. Sales salaries (excluding commissions) are $72,000 per year.
5. General and administrative salaries are $132,000 per year. Maintenance expense equals $2,100 per month and is paid in cash.
6. Equipment reported in the December 31, 2019, balance sheet was purchased in January 2019. 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, $38,400; February, $103,200; and March, $21,600. This equipment will be depreciated under the straight-line method over eight years with no salvage value. A full months depreciation is taken for the month in which equipment is purchased.
7. The company plans to buy land at the end of March at a cost of $170,000, which will be paid with cash on the last day of the month.
8. The company 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 $22,000 at the end of each month.
9. The income tax rate for the company is 39%. Income taxes on the first quarters income will not be paid until April 15.

Required: Prepare a master budget for each of the first three months of 2020; include the following component budgets.

1. Monthly sales budgets. 2. Monthly merchandise purchases budgets. 3. Monthly selling expense budgets. 4. Monthly general and administrative expense budgets. 5. Monthly capital expenditures budgets. 6. Monthly cash budgets. 7. Budgeted income statement for the entire first quarter (not for each month). 8. Budgeted balance sheet as of March 31, 2020.

Monthly cash budgets. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar.)

	DIMSDALE SPORTS CO. Cash Budget January, February, and March 2020 January February March Beginning cash balance Cash receipts from customers Total cash available Cash payments for: Total cash payments 0 0 0 Preliminary cash balance Ending cash balance Loan balance January February March Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month

• Required 6 Calc