Near the end of 2015, the management of Dimsdale Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2015.

DIMSDALE SPORTS COMPANY Estimated Balance Sheet December 31, 2015
Assets
Cash				$	36,000
Accounts receivable					525,000
Inventory					150,000
Total current assets					711,000
Equipment	$	540,000
Less: accumulated depreciation		67,500
Equipment, net					472,500
Total assets				$	1,183,500
Liabilities and Equity
Accounts payable	$	360,000
Bank loan payable		15,000
Taxes payable (due 3/15/2016)		90,000
Total liabilities				$	465,000
Common stock		472,500
Retained earnings		246,000
Total stockholders equity					718,500
Total liabilities and equity				$	1,183,500

To prepare a master budget for January, February, and March of 2016, management gathers the following information.

a.	Dimsdale Sports single product is purchased for $30 per unit and resold for $55 per unit. The expected inventory level of 5,000 units on December 31, 2015, is more than managements desired level for 2016, which is 20% of the next months expected sales (in units). Expected sales are: January, 7,000 units; February, 9,000 units; March, 11,000 units; and April, 10,000 units.
b.	Cash sales and credit sales represent 25% and 75%, respectively, of total sales. Of the credit sales, 60% is collected in the first month after the month of sale and 40% in the second month after the month of sale. For the December 31, 2015, accounts receivable balance, $125,000 is collected in January and the remaining $400,000 is collected in February.
c.	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, 2015, accounts payable balance, $80,000 is paid in January and the remaining $280,000 is paid in February.
d.	Sales commissions equal to 20% of sales are paid each month. Sales salaries (excluding commissions) are $60,000 per year.
e.	General and administrative salaries are $144,000 per year. Maintenance expense equals $2,000 per month and is paid in cash.
f.	Equipment reported in the December 31, 2015, balance sheet was purchased in January 2015. 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, $36,000; February, $96,000; and March, $28,800. 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.
g.	The company plans to acquire land at the end of March at a cost of $150,000, which will be paid with cash on the last day of the month.
h.	Dimsdale Sports 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 $25,000 in each month.
i.	The income tax rate for the company is 40%. 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 2016; include the following component budgets:

DIMSDALE SPORTS CO.
Sales Budget
For January, February, and March, 2016
	Budgeted Unit Sales	Budgeted Unit Price	Budgeted Total Dollars
January	7,000	$55	385,000
February	9,000	55	495,000
March	11,000	55	605,000
Totals for the quarter	27,000	$55.00	1,485,000

DIMSDALE SPORTS CO.
Merchandise Purchases Budget
January, February, and March 2016
	January	February	March	Total
Next month's budgeted sales (units)	9,000	11,000	10,000
Ratio of inventory to future sales	20%	20%	20%
Budgeted ending inventory (units)	1,800	2,200	2,000
Budgeted units sales for month	7,000	9,000	11,000
Required units of available merchandise	8,800	11,200	13,000
Beginning inventory (units)	(5,000)	(1,800)	(2,200)
Units to be purchased	3,800	9,400	10,800	24,000
Budgeted cost per unit	$30	$30	$30	$30
Budgeted merchandise purchases	$114,000	$282,000	$324,000	$720,000

DIMSDALE SPORTS COMPANY
Selling Expense Budget
January, February, and March 2016
	January	February	March	Total
Budgeted sales	$385,000	$495,000	$605,000
Sales commission percent	20%	20%	20%
Sales commissions	77,000	99,000	121,000	$297,000
Sales salaries	5,000	5,000	5,000	15,000
Total selling expenses	$82,000	$104,000	$126,000	$312,000

	January	February	March	Total
Equipment - beginning of month	$540,000	$576,000	$672,000
Equipment purchases	36,000	96,000	28,800
Equipment - end of month	$576,000	$672,000	$700,800
Monthly depreciation expense	$6,000	$7,000	$7,300	$20,300
DIMSDALE SPORTS CO.
General and Administrative Expense Budget
January, February, and March 2016
	January	February	March	Total
Depreciation expense	$6,000	$7,000	$7,300	$20,300
Salaries expense	12,000	12,000	12,000	36,000
Maintenance expense	2,000	2,000	2,000	6,000
Total	$20,000	$21,000	$21,300	$62,300

DIMSDALE SPORTS COMPANY
Capital Expenditures Budget
January, February, and March 2016
	January	February	March	Total
Equipment purchases	$36,000	$96,000	$28,800	$160,800
Land purchase	0	$0	150,000	150,000
Total	$36,000	$96,000	$178,800	$310,800

DIMSDALE SPORTS CO.
Cash Budget
January, February, and March 2016
	January	February	March
Beginning cash balance	$36,000
Cash receipts from customers
Total cash available
Cash disbursements:
Payments for merchandise
Purchase of land	0	0	150,000
Purchases of equipment	36,000	96,000	28,800
General & administrative salaries	12,000	12,000	12,000
Maintenance expense	2,000	2,000	2,000
Sales commissions	77,000	99,000	121,000
Sales salaries	5,000	5,000	5,000
Interest on bank loan
Taxes payable	0	0	90,000
Total cash disbursements	132,000	214,000	408,800
Preliminary cash balance
Additional loan (loan repayment)
Ending cash balance
Loan balance
	January	February	March
Loan balance - Beginning of month	$15,000
Additional loan (loan repayment)	15,000
Loan balance - End of month

Calculation of Cash receipts from customers:
		January	February	March
Sales in units
Selling price per unit
Total budgeted sales
Cash sales	25%
Sales on credit	75%
		------------------Collected in--------------			March 31
	Total	January	February	March	Receivable
Accounts Receivable - January 1	$525,000	$125,000	$400,000
Credit sales from:
January					0
February					0
March					0
Total collection of receivables		$125,000	$400,000	$0	$0
Total cash receipts from customers
		January	February	March
Collections of receivables
Calculation of payments for merchandise:
		January	February	March
Desired ending inventory (units)
Budgeted sales in units
Total units required
Beginning inventory (units)
Number of units to be purchased
Cost per unit
Total cost of purchases
		----------------Paid in---------------			March 31
	Total	January	February	March	Payable
Accounts Payable - January 1	$360,000	$80,000	$280,000
Merchandise purchases in:
January					0
February					0
March					0
Total cash paid for merchandise		$80,000	$280,000	$0	$0

7. Budgeted income statement for the entire first quarter (not for each month).

8.

Budgeted balance sheet as of March 31, 2016.