Question

[The following informationapplies to the questions displayed below.]

Beech Corporation is a merchandising company that is preparing amaster budget for the third quarter of the calendar year. Thecompany’s balance sheet as of June 30th is shown below:

Beech Corporation
Balance Sheet
June 30

Assets

Cash

$ 81,000

Accountsreceivable

132,000

Inventory

56,250

Plant and equipment,net of depreciation

214,000

Total assets

$ 483,250

Liabilities and Stockholders’ Equity

Accountspayable

$ 75,000

Common stock

346,000

Retainedearnings

62,250

Total liabilitiesand stockholders’ equity

$ 483,250

alue:
10.00 points

Required information

Beech’s managers have made thefollowing additional assumptions and estimates:

1.	Estimated sales for July, August, September, and October will be$250,000, $270,000, $260,000, and $280,000, respectively.
2.	All sales are on credit and all credit sales are collected. Eachmonth’s credit sales are collected 45% in the month of sale and 55%in the month following the sale. All of the accounts receivable atJune 30 will be collected in July.
3.	Each month’s ending inventory must equal 20% of the cost of nextmonth’s sales. The cost of goods sold is 75% of sales. The companypays for 30% of its merchandise purchases in the month of thepurchase 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 $46,000.Each month $5,000 of this total amount is depreciation expense andthe remaining $41,000 relates to expenses that are paid in themonth they are incurred.
5.	The company does not plan to borrow money or pay or declaredividends during the quarter ended September 30. The company doesnot plan to issue any common stock or repurchase its own stockduring 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 thequarter ended September 30.

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, andSeptember. Also compute total merchandise purchases for the quarterended September 30.

Merchandise Purchases Budget
	July	August	September	Total
Budgeted cost of goodssold
Total needs
Required purchases

2-b.

Prepare a schedule of expected cash disbursements formerchandise purchases for July, August, and September. Also computetotal cash disbursements for merchandise purchases for the quarterended September 30.

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

4.Prepare a balance sheet as of September 30.

Beech Corporation
Balance Sheet
September 30
Assets
Cash
Accounts receivable
Inventory
Plant and equipment, net
Total assets	$0
Liabilities and Stockholders'Equity
Accounts payable
Common stock
Retained earnings
Total liabilities andstockholders' equity	$0

.

Prepare an income statement for the quarter ended September30.

Beech Corporation
Income Statement
For the Quarter Ended September 30
Sales
Cost of goods sold
Gross margin	0
Selling and administrative expenses
Net operating income	0
Interest expense
Net income	$0