[The following information applies to the questions displayed below.] Beech Corp
ID: 2482477 • Letter: #
Question
[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 $ 85,000
Accounts receivable 141,000
Inventory 83,250
Plant and equipment, net of depreciation 226,000
Total assets $ 535,250
Liabilities and Stockholders’ Equity
Accounts payable $ 87,000
Common stock 350,000
Retained earnings 98,25
0 Total liabilities and stockholders’ equity $ 535,250
Estimated sales for July, August, September, and October will be $370,000, $390,000, $380,000, and $400,000, 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 30% 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 $50,000. Each month $7,000 of this total amount is depreciation expense and the remaining $43,000 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.
Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter ended September 30.
Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30.
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.
$0
Prepare an income statement for the quarter ended September 30.
Beech CorporationIncome StatementFor the Quarter Ended September 3000$0
Prepare a balance sheet as of September 30.
Beech CorporationBalance SheetSeptember 30AssetsTotal assets$0Liabilities and Stockholders' EquityTotal liabilities and stockholders' equity$0
Beech’s managers have made the following additional assumptions and estimates:Explanation / Answer
All Amounts in $ 1. 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 From accounts receivable 141000 141000 From July sales 129500 240500 370000 From August sales 136500 253500 390000 From September sales 133000 133000 Total cash collections 270500 377000 386500 1034000 2-a. 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 Total Opening Inventory 83250 117000 114000 83250 Budgeted cost of goods sold 277500 292500 285000 855000 Closing Inventory 117000 114000 120000 120000 Required purchases 311250 289500 291000 891750 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. Schedule of Cash Disbursements for Purchases July August September Total From accounts payable 87000 87000 From July purchases 124500 186750 311250 From August purchases 115800 173700 289500 From September purchases 116400 116400 Total cash disbursements 211500 302550 290100 804150 3 Prepare an income statement for the quarter ended September 30. Beech Corporation Income Statement For the Quarter Ended September 30 Sales 1140000 Cost of Goods Sold 855000 Gross Profit 285000 Depreciation 21000 Selling and Administrative Expenses 129000 150000 Operating Income 135000 4 Prepare a balance sheet as of September 30. Beech Corporation Balance Sheet September 30 Assets Cash 185850 Accounts receivable 247000 Inventory 120000 Plant and equipment, net of depreciation 205000 Total assets 757850 Liabilities and Stockholders’ Equity Accounts payable 174600 Common stock 350000 Retained earnings 233250 Total Liabilities and Stockholders' Equity 757850
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