Question

Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below:

Beech Corporation
Balance Sheet
June 30
Assets
Cash	$	84,000
Accounts receivable		144,000
Inventory		63,750
Plant and equipment, net of depreciation		223,000
Total assets	$	514,750
Liabilities and Stockholders’ Equity
Accounts payable	$	84,000
Common stock		349,000
Retained earnings		81,750
Total liabilities and stockholders’ equity	$	514,750

Beech’s managers have made the following additional assumptions and estimates:

1. Estimated sales for July, August, September, and October will be $340,000, $360,000, $350,000, and $370,000, respectively.

2. All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.

3. Each month’s ending inventory must equal 25% of the cost of next month’s sales. The cost of goods sold is 75% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.

4. Monthly selling and administrative expenses are always $44,000. Each month $6,000 of this total amount is depreciation expense and the remaining $38,000 relates to expenses that are paid in the month they are incurred.

5. The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30.

Required:

1. Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter ended September 30.

2-a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30.

2-b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Also compute total cash disbursements for merchandise purchases for the quarter ended September 30.

3. Prepare an income statement for the quarter ended September 30.

4. Prepare a balance sheet as of September 30.

Complete this question by entering your answers in the tabs below.

Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter ended September 30.

	Schedule of Expected Cash Collections Month July August September Quarter $0 From July sales 0 From August sales 0 From September sales 0 Total cash collections $0 $0 $0 $0

Req 2A

Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30.

	Merchandise Purchases Budget July August September Quarter Total needs Required purchases

Req 2B

Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Also compute total cash disbursements for merchandise purchases for the quarter ended September 30.

	Schedule of Cash Disbursements for Purchases July August September Quarter $0 From July purchases 0 From August purchases 0 From September purchases 0 Total cash disbursements $0 $0 $0 $0

Req 3

Prepare an income statement for the quarter ended September 30.

	Beech Corporation Income Statement For the Quarter Ended September 30 0 0 $0

Req 4

Prepare a balance sheet as of September 30.

	Beech Corporation Balance Sheet September 30 Assets Total assets $0 Liabilities and Stockholders' Equity Total liabilities and stockholders' equity $0

Answer 1

Schedule of Expected Cash Collections
	Month
	July	August	September	Quarter	October
From Accounts receivable	$144,000			$144,000
From July sales (340000*35%) than 65%	$119,000	$221,000		$340,000
From August sales (360000*35%)and 65%		$126,000.00	$234,000.00	$360,000
From September sales			$122,500.00	$122,500
Total cash collections	$263,000	$347,000	$356,500	$966,500
working
Total sales T	$340,000	$360,000	$350,000	1050000	$370,000
ans 2a
Inventory Purchases Budget
	July	August	September	Quarter	October
Budgeted Cost of Goods Sold (75%*T sales)	$255,000	$270,000	$262,500	$787,500	$277,500
Add Desired Ending Inventory (25%*next COGS	$67,500	$65,625	$69,375	$69,375
Total Needs	$322,500	$335,625	$331,875	$856,875
Less Beginning Inventory	$63,750	$67,500	$65,625	$63,750
Inventory purchases	$258,750	$268,125	$266,250	$793,125
ans 2b
Schedule of Cash Disbursements for Purchases
	July	August	September	Quarter
For Accounts payable	$84,000			$84,000
From July purchases (258750*.4)and .6	$103,500.0	$155,250.00		$258,750
From August purchases		$107,250.0	$160,875.00	$268,125
From September purchases (266250*40%)			$106,500	$106,500
Total cash disbursements	$187,500	$262,500	$267,375	$717,375
working
Cash Budget
	July	August	September	Quarter
Beg cash balance	$84,000	$121,500	$168,000	$84,000
Collection from customers	263,000	347,000	356,500	966,500
Cash available	347,000	468,500	524,500	1,050,500
Less: cash disbursement
For inventory	187,500	262,500	267,375	717,375
For S & A exp	$38,000	$38,000	$38,000	$114,000
total payments	225,500	300,500	305,375	831,375
excess of cash available over cash disbursement	121,500	168,000	219,125	219,125
ending cash balance	$121,500	$168,000	$219,125	$219,125
ans 3
Income statement
Sales	1050000
Less: Cost of good sold	$787,500
Gross profit	$262,500
Selling & administrative expenses (44000*3)	132000
Net Income	$130,500
ans 4
Beech Corporation
Balance Sheet
30-Sep
Assets
Cash	$219,125
Accounts receivable (350000*.65)	$227,500
Inventory	$69,375
Plant and equipment, net of depreciation (223000-18000)	205000
Total assets	$721,000
Liabilities and Stockholders’ Equity
Accounts payable (266250*.6)	$159,750
Common stock	349,000
Retained earnings (81750+124875)	$212,250
Total liabilities and stockholders’ equity	$721,000
If any doubt please comment. If satisfied rate