Near the end of 2011, the management of Simid Sports Co., a merchandising compan

Question

Near the end of 2011, the management of Simid Sports Co., a merchandising company, prepared the following estimated statement of financial position for December 31, 2011. SIMID SPORTS COMPANY Estimated Statement of Financial position December 31, 2011 Assets Cash Accounts receivable Inventory $36,500 520,000 95,000 Total current assets Equipment Less accumulated depreciation 651,500 474,250 $ 1,125,750 $542,000 67,750 Total assets Liabilities and Equity Accounts payable Bank loan payable Tax payable (due 3/15/2012) $345,000 14,000 91,000 $ 450,000 Total liabilities Share capital-ordinary Retained earnings 474,000 201,750 Total stockholders' equity 675,750 Total liabilities and equity $1,125,750 To prepare a master budget for January, February, and March of 2012, management gathers the following information. a. Simid Sports' 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, 2011, is more than management's desired level for 2012 which is 20% of the next month's expected sales (in units). Expected sales are: January, 6,750 units; February, 8,500 units; March, 11,500 units; and April, 10,000 units b. 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, 2011, accounts receivable balance, $130,000 is collected in January and the remaining $390,000 is collected in February.

Explanation / Answer

Answer:7

Answer:9

SIMID SPORTS CO. Budgeted Income Statement For three months nded March 31,2012 Sales 1471250 COGS 535000 Gross Profit 936250 Operating expenses: Sales commissions 294250 Sales salaries 12000 General administrative salaries 39000 Maintenance expenses 6300 Depreciation exp 20395.83 Interest exp 140 372085.8 PBT 564164.2 Less: income tax 91000 Net Profit 473164.2

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