In: Accounting
Required information
[The following information applies to the questions displayed below.]
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 | $ | 82,000 |
Accounts receivable | 129,000 | |
Inventory | 52,500 | |
Plant and equipment, net of depreciation | 217,000 | |
Total assets | $ | 480,500 |
Liabilities and Stockholders’ Equity | ||
Accounts payable | $ | 78,000 |
Common stock | 347,000 | |
Retained earnings | 55,500 | |
Total liabilities and stockholders’ equity | $ | 480,500 |
Beech’s managers have made the following additional assumptions and estimates:
Estimated sales for July, August, September, and October will be $280,000, $300,000, $290,000, and $310,000, respectively.
All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 45% in the month of sale and 55% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.
Each month’s ending inventory must equal 15% of the cost of next month’s sales. The cost of goods sold is 70% of sales. The company pays for 30% of its merchandise purchases in the month of the purchase and the remaining 70% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.
Monthly selling and administrative expenses are always $52,000. Each month $5,000 of this total amount is depreciation expense and the remaining $47,000 relates to expenses that are paid in the month they are incurred.
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.
1 | Schedule of expected cash collections: | ||||||
July | August | September | Quarter | ||||
Estimated sales | 280000 | 300000 | 290000 | 870000 | |||
June credit sales collected | 129000 | 129000 | |||||
July credit sales collected | 126000 | 154000 | 280000 | ||||
(280000*45%) | (280000*55%) | ||||||
Aug credit sales collected | 135000 | 165000 | 300000 | ||||
(300000*45%) | (300000*55%) | ||||||
Sep credit sales collected | 130500 | 130500 | |||||
(290000*45%) | |||||||
Total cash collections | 255000 | 289000 | 295500 | 839500 | |||
2 | |||||||
a. | Merchandise purchase budget | ||||||
July | August | September | Quarter | ||||
Estimated sales | 280000 | 300000 | 290000 | 870000 | |||
Cost of goods sold | 196000 | 210000 | 203000 | 609000 | |||
(70% of sales) | |||||||
Add:Ending inventory | 45000 | 43500 | 46500 | ||||
(15% of next month's sales) | (300000*15%) | (290000*15%) | (310000*15%) | ||||
Total need | 241000 | 253500 | 249500 | 744000 | |||
Less:Beginning inventory | 52500 | 45000 | 43500 | ||||
(300000*15%) | (290000*15%) | ||||||
Required purchase | 188500 | 208500 | 206000 | 603000 | |||
b. | Schedule of expected cash disbursement for merchandise purchase | ||||||
July | August | September | Quarter | ||||
Beginning accounts payable | 78000 | 0 | 0 | 78000 | |||
July purchases | 56550 | 131950 | 0 | 188500 | |||
(188500*30%) | (188500*70%) | ||||||
Aug purchases | 0 | 62550 | 145950 | 208500 | |||
(208500*30%) | (208500*70%) | ||||||
Sep purchases | 0 | 0 | 61800 | 61800 | |||
(206000*30%) | |||||||
Total cash disbursements | 134550 | 194500 | 207750 | 536800 | |||
3 | Income statement | ||||||
$ | $ | ||||||
Sales | (280000+300000+290000) | 870000 | |||||
Less: Cost of goods sold | (870000*70%) | 609000 | |||||
Gross profit | 261000 | ||||||
Less: Selling and administrative expenses | (52000*3) | 156000 | |||||
Operating income |
Related SolutionsRequired information [The following information applies to the questions displayed below.] Beech Corporation is a merchandising...Required information [The following information applies to the
questions displayed below.] 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 $
96,000 Accounts receivable 139,000 Inventory 70,200 Plant and
equipment, net of depreciation 228,000 Total assets $ 533,200
Liabilities and Stockholders’ Equity Accounts payable $ 89,000
Common stock 333,000 Retained...
Required information [The following information applies to the questions displayed below.] Beech Corporation is a merchandising...Required information
[The following information applies to the questions
displayed below.]
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
$
96,000
Accounts receivable
139,000
Inventory
70,200
Plant and equipment, net of
depreciation
228,000
Total assets
$
533,200
Liabilities
and Stockholders’ Equity
Accounts payable
$
89,000
Common stock
333,000
Retained...
Required information [The following information applies to the questions displayed below.] Beech Corporation is a merchandising...Required information
[The following information applies to the questions
displayed below.]
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
$
73,000
Accounts receivable
125,000
Inventory
56,000
Plant and equipment, net of depreciation
221,000
Total assets
$
475,000
Liabilities and Stockholders’
Equity
Accounts payable
$
82,000
Common stock
309,000
Retained...
Required information [The following information applies to the questions displayed below.] Beech Corporation is a merchandising...Required information
[The following information applies to the questions
displayed below.]
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...
Required information [The following information applies to the questions displayed below.] Beech Corporation is a merchandising...Required information
[The following information applies to the questions
displayed below.]
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
$
95,000
Accounts receivable
142,000
Inventory
54,000
Plant and equipment, net of depreciation
225,000
Total assets
$
516,000
Liabilities and Stockholders’
Equity
Accounts payable
$
86,000
Common stock
332,000
Retained...
Required information [The following information applies to the questions displayed below.] Beech Corporation is a merchandising...Required information [The following information applies to the
questions displayed below.] 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 $
95,000 Accounts receivable 142,000 Inventory 54,000 Plant and
equipment, net of depreciation 225,000 Total assets $ 516,000
Liabilities and Stockholders’ Equity Accounts payable $ 86,000
Common stock 332,000 Retained...
Required information [The following information applies to the questions displayed below.] Beech Corporation is a merchandising...Required information
[The following information applies to the questions
displayed below.]
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
$
70,000
Accounts receivable
134,000
Inventory
48,300
Plant and equipment, net of
depreciation
212,000
Total assets
$
464,300
Liabilities
and Stockholders’ Equity
Accounts payable
$
73,000
Common stock
306,000
Retained...
Required information [The following information applies to the questions displayed below.] Beech Corporation is a merchandising...Required information
[The following information applies to the questions
displayed below.]
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
$
82,000
Accounts
receivable
129,000
Inventory
52,500
Plant and
equipment, net of depreciation
217,000
Total
assets
$
480,500
Liabilities and Stockholders’ Equity
Accounts
payable
$
78,000
Common
stock
347,000
Retained...
Required information [The following information applies to the questions displayed below.] Beech Corporation is a merchandising...Required information [The following information applies to the
questions displayed below.] 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 $
82,000 Accounts receivable 129,000 Inventory 52,500 Plant and
equipment, net of depreciation 217,000 Total assets $ 480,500
Liabilities and Stockholders’ Equity Accounts payable $ 78,000
Common stock 347,000 Retained...
Required information [The following information applies to the questions displayed below.] Beech Corporation is a merchandising...Required information [The following information applies to the
questions displayed below.] 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 $
94,000 Accounts receivable 145,000 Inventory 59,400 Plant and
equipment, net of depreciation 222,000 Total assets $ 520,400
Liabilities and Stockholders’ Equity Accounts payable $ 83,000
Common stock 331,000 Retained...
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