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	$	86,000
Accounts receivable		138,000
Inventory		75,000
Plant and equipment, net of depreciation		229,000
Total assets	$	528,000
Liabilities and Stockholders’ Equity
Accounts payable	$	90,000
Common stock		351,000
Retained earnings		87,000
Total liabilities and stockholders’ equity	$	528,000

 

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

 

Estimated sales for July, August, September, and October will be $400,000, $420,000, $410,000, and $430,000, respectively.

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.

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.

Monthly selling and administrative expenses are always $56,000. Each month $8,000 of this total amount is depreciation expense and the remaining $48,000 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.

REQ 1. WHAT NUMBER AM I MISSING

REQ. 2A IS COMPLETE

REQ. 2B WHAT NUMBER AM I MISSING
REQ. 3 WHAT NUMBER AM I MISSING
REQ. 4 WHAT NUMBER AM I MISSING
 

Transcribed Image Text:

Schedule of Expected Cash Collections Month July August September Quarter From accounts receivable $ 138,000 $ 138,000 From July sales 140,000 260,000 400,000 From August sales 147,000 273,000 420,000 From September sales 143,500 143,500 2$ 1,101,500 Total cash collections $ 278,000 $ 407,000 $ 416,500 Schedule of Expected Cash Collections Month July August September Quarter From accounts receivable $ 138,000 $ 138,000 From July sales 140,000 260,000 400,000 From August sales 147,000 273,000 420,000 From September sales 143,500 143,500 2$ 1,101,500 Total cash collections $ 278,000 $ 407,000 $ 416,500

Answer rating: 100% (QA)

A schedule of expected cash collections for July August and September July August September Total Sa... View the full answer