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 $   72,000   Accounts receivable 128,000   Inventory 60,900   Plant and equipment, net of depreciation 218,000   Total assets $ 478,900 Liabilities and Stockholders’ Equity   Accounts payable $   79,000   Common stock 308,000   Retained earnings 91,900   Total liabilities and stockholders’ equity $ 478,900 Beech’s managers have made the following additional assumptions and estimates:

1.	Estimated sales for July, August, September, and October will be $290,000, $310,000, $300,000, and $320,000, respectively.
2.	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.
3.	Each month’s ending inventory must equal 20% 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.
4.	Monthly selling and administrative expenses are always $54,000. Each month $5,000 of this total amount is depreciation expense and the remaining $49,000 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.
	Beech Corporation Schedule of Expected Cash Collections Month July August September Quarter From accounts receivable $0 From July sales 0 From August sales 0 From September sales 0 Total cash collections $0 $0 $0 $0

             

2-a.	Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30.
	Beech Corporation Merchandise Purchases Budget July August September Total Budgeted cost of goods sold Total needs Required purchases

             

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.
	Beech Corporation Schedule of Cash Disbursements for Purchases July August September Total From accounts payable $0 From July purchases 0 From August purchases 0 From September purchases 0 Total cash disbursements $0 $0 $0 $0

             

3.	Prepare an income statement for the quarter ended September 30 using an absorption income statement format.
	Beech Corporation Income Statement For the Quarter Ended September 30 0 0 $0

             

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

AND CAN YALL PUT EACH PROCESS ON HOW YOU FIND THE ANSWER? PLEASE IT WILL HELP ME A LOT TO UNDERSTAND THE PROCESS.

Answer 1

Required Budgets are as prepared below:

1. Sales Budget
Beech Corporation
Sales Budget
For the quarter ended September 30
	Month
Particulars	July	August	September	Total	October
Sales	290,000	310,000	300,000	900,000	320,000
Total Sales	$290,000	$310,000	$300,000	$900,000
Beech Corporation
Schedule of expected Cash collections
For the quarter ended September 30
	Month
Particulars	July	August	September	Total
June sales (Account Receivables of June collected in July)	128,000			128,000
July Sales (45% collected in July and 55% in August)	130,500	159,500		290,000
August sales		139,500	170,500	310,000
September sales			135,000	135,000
Total collections	258,500	299,000	305,500	863,000
2. Production Budget
Beech Corporation
Production Budget
For the quarter ended September 30
	Month
Particulars	July	August	September	Total	October
Sale Units (a)	290,000	310,000	300,000	900,000	320,000
Cost of Sales (70% of sales ) (a)	203,000	217,000	210,000	630,000	224,000
Planned ending units (b) (20% of next month Cost of sales)	43,400	42,000	44,800	44,800	1350
Beginning units (c )	60,900	43,400	42,000	60,900	44,800
Required purchases (d)= (a+b-c)	185,500	215,600	212,800	613,900	276,550
Beech Corporation
Schedule of expected Cash payments
For the quarter ended September 30
	Month
Particulars	July	August	September	Total
Beginning Accounts Payable	$79,000			$79,000
July purchases (30% in July and 70% in August)	$55,650	$129,850		$185,500
August Purchases		$64,680	$150,920	$215,600
September purchases			$63,840	$63,840
Total payments (a+b+c+d)	$134,650	$194,530	$214,760	$543,940
Beech Corporation
Budgeted Income Statement
For the quarter ended September 30
Particulars	Amount ($)	Amount ($)
Sales		900,000
Less: Cost of goods sold (70% of sales)		630,000
Gross margin		270,000
Less: Selling and administartive exp
Depreciation (5,000*3)	15,000
Selling and adm (49,000*3)	147,000	162,000
Net Income		108,000
Beech Corporation
Budgeted balance Sheet
Sep-30
Assets
Cash (72,000+863,000-564,240-147,000)	244,060
Accounts Receivable	165,000
Inventory	44,800
Property and equipment Net (218,000-15,000)	203,000
Total assets	656,860
Liabilities and Stockholders' Equity
Accounts Payable purchases	148,960
Common Stock	308,000
Retained earnings (91,900+108,000)	199,900
Total liabilities and stockholders' equity	656,860