Question

In: Accounting

Beech Corporation is a merchandising company that is preparing a master budget for the third quarter...

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 $   75,000
  Accounts receivable 140,000
  Inventory 66,500
  Plant and equipment, net of depreciation 227,000
  Total assets $ 508,500
Liabilities and Stockholders’ Equity
  Accounts payable $   88,000
  Common stock 311,000
  Retained earnings 109,500
  Total liabilities and stockholders’ equity $ 508,500
Beech’s managers have made the following additional assumptions and estimates:
1.

Estimated sales for July, August, September, and October will be $380,000, $400,000, $390,000, and $410,000, 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 70% 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 $52,000. Each month $7,000 of this total amount is depreciation expense and the remaining $45,000 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.

Questions:

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

3. 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.

4. Prepare an income statement for the quarter ended September 30 using an absorption income statement format.

5. Prepare a balance sheet as of September 30.

Solutions

Expert Solution



Related Solutions

Beech Corporation is a merchandising company that is preparing a master budget for the third quarter...
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 $ 74,000 Accounts receivable 143,000 Inventory 73,500 Plant and equipment, net of depreciation 224,000 Total assets $ 514,500 Liabilities and Stockholders’ Equity Accounts payable $ 85,000 Common stock 310,000 Retained earnings 119,500 Total liabilities and stockholders’ equity $ 514,500 Beech’s managers...
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter...
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 $ 74,000 Accounts receivable 143,000 Inventory 73,500 Plant and equipment, net of depreciation 224,000 Total assets $ 514,500 Liabilities and Stockholders’ Equity Accounts payable $ 85,000 Common stock 310,000 Retained earnings 119,500 Total liabilities and stockholders’ equity $ 514,500 Beech’s managers...
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter...
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 $  92,000 Accounts receivable 130,000 Inventory 48,600 Plant and equipment, net of depreciation 216,000 Total assets $ 486,600 Liabilities and Stockholders’ Equity Accounts payable $  77,000 Common stock 329,000 Retained earnings 80,600 Total liabilities and stockholders’ equity $ 486,600 Beech’s managers have made...
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter...
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 $   71,000   Accounts receivable 131,000   Inventory 45,500   Plant and equipment, net of depreciation 215,000   Total assets $ 462,500 Liabilities and Stockholders’ Equity   Accounts payable $   76,000   Common stock 307,000   Retained earnings 79,500   Total liabilities and stockholders’ equity $ 462,500 rev: 05_02_2017_QC_CS-88254...
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter...
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 earnings 85,300 Total liabilities and stockholders’ equity $ 464,300 Beech’s managers...
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter...
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 $  90,000 Accounts receivable 136,000 Inventory 62,000 Plant and equipment, net of depreciation 210,000 Total assets $ 498,000 Liabilities and Stockholders’ Equity Accounts payable $  71,100 Common stock 327,000 Retained earnings 99,900 Total liabilities and stockholders’ equity $ 498,000 Beech’s managers have made...
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter...
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 $  90,000 Accounts receivable 136,000 Inventory 62,000 Plant and equipment, net of depreciation 210,000 Total assets $ 498,000 Liabilities and Stockholders’ Equity Accounts payable $  71,100 Common stock 327,000 Retained earnings 99,900 Total liabilities and stockholders’ equity $ 498,000 Beech’s managers have made...
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter...
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 $ 90,000 Accounts receivable 136,000 Inventory 62,000 Plant and equipment, net of depreciation 210,000 Total assets $ 498,000 Liabilities and Stockholders’ Equity Accounts payable $ 71,100 Common stock 327,000 Retained earnings 99,900 Total liabilities and stockholders’ equity $ 498,000 Beech’s managers...
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter...
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 $  90,000 Accounts receivable 136,000 Inventory 62,000 Plant and equipment, net of depreciation 210,000 Total assets $ 498,000 Liabilities and Stockholders’ Equity Accounts payable $  71,100 Common stock 327,000 Retained earnings 99,900 Total liabilities and stockholders’ equity $ 498,000 Beech’s managers have made...
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter...
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 Exercise 8-13...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT