Beech Corporation is a merchandising company that is preparing a master budget f

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 Balance Sheet 86,000 138,000 75,000 229,000 Cash Accounts receivable Inventory Total assets $ 528,000 Liabilities and Stockholders Equity $ 90,000 351,000 87,000 Accounts payable Common stock Retained earning Total liabilíties and stoekholders equity Beech's managers have made the following additional assumptions and estimates: 1. Estimated sales for July, August, September, and October will be $400.000, $420,000, $410,000, and $430,000, respectively. 2. All sales are on credit and al credit sales are collected. Eac h month's credit sales are collected 35% in the month of sale and 65% in the month folowing the sale. All of the accounts at June 30 will be 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 75% of sales. The pays for 40% of its me purchases in the month of the purchase and the remaining 60% in the month following All of the accounts payable at June 30 will be paid in July the 4. Monthly selling and adm 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 5. The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30. Required: sh collections for July. August, and September. Also compute total cash coilections for the quarter 1. Prepare a schedule ended September 30 ca 2 Prepare a chandise purchases budget for July August. ond Septembet Also compute total merchandise purchases for the quarter ended 2-b. Prepare a schedule of expected cash total cash 3. Prepare an income r 30. ts for merchandise purchases for the quarter ended September 30 statement for the quarter ended September 30 sheet as of September 30

Explanation / Answer

1)

2a)

2B)

3)

4)

SCHEDULE FOR EXPECTED CASH COLLECTIONS JULY AUGUST SEPTEMBER QUARTER ACCOUNTS RECIEVABLE $138,000 0 0 $138,000 FROM JULY SALES $140,000 $260,000 0 $400,000 FROM AUGUST SALES 0 $147,000 $273,000 $420,000 FROM SEPTEMBER SALES 0 0 $143,500 $143,500 TOTAL CASH COLLECTIONS $278,000 $407,000 $416,500 $1,101,500

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