Beech Corporation is a merchandising company that is preparing amaster budget for the third quarter of the calendar year. Thecompanyâs balance sheet as of June 30th is shown below:
Beech Corporation Balance Sheet June 30 Assets Cash $ 93,000 Accounts receivable 127,000 Inventory 45,000 Plant and equipment, net ofdepreciation 219,000 Total assets $ 484,000 Liabilitiesand Stockholdersâ Equity Accounts payable $ 80,000 Common stock 330,000 Retained earnings 74,000 Total liabilities andstockholdersâ equity $ 484,000
Beechâs managers have made the following additional assumptionsand estimates:
-Estimated sales for July, August, September, and October willbe $300,000, $320,000, $310,000, and $330,000, respectively.
-All sales are on credit and all credit sales are collected.Each monthâs credit sales are collected 35% in the month of saleand 65% in the month following the sale. All of the accountsreceivable at June 30 will be collected in July.
-Each monthâs ending inventory must equal 25% of the cost ofnext monthâs sales. The cost of goods sold is 60% of sales. Thecompany pays for 40% of its merchandise purchases in the month ofthe purchase and the remaining 60% in the month following thepurchase. All of the accounts payable at June 30 will be paid inJuly.
-Monthly selling and administrative expenses are always $56,000.Each month $6,000 of this total amount is depreciation expense andthe remaining $50,000 relates to expenses that are paid in themonth they are incurred.
-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.
2-a. Prepare a merchandise purchases budget for July, August,and September. Also compute total merchandise purchases for thequarter ended September 30.
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.
3. Prepare an income statement for the quarter ended September30.
4. Prepare a balance sheet as of September 30.
Beech Corporation is a merchandising company that is preparing amaster budget for the third quarter of the calendar year. Thecompanyâs balance sheet as of June 30th is shown below:
Beech Corporation | ||
Balance Sheet | ||
June 30 | ||
Assets | ||
Cash | $ | 93,000 |
Accounts receivable | 127,000 | |
Inventory | 45,000 | |
Plant and equipment, net ofdepreciation | 219,000 | |
Total assets | $ | 484,000 |
Liabilitiesand Stockholdersâ Equity | ||
Accounts payable | $ | 80,000 |
Common stock | 330,000 | |
Retained earnings | 74,000 | |
Total liabilities andstockholdersâ equity | $ | 484,000 |
Beechâs managers have made the following additional assumptionsand estimates: -Estimated sales for July, August, September, and October willbe $300,000, $320,000, $310,000, and $330,000, respectively. -All sales are on credit and all credit sales are collected.Each monthâs credit sales are collected 35% in the month of saleand 65% in the month following the sale. All of the accountsreceivable at June 30 will be collected in July. -Each monthâs ending inventory must equal 25% of the cost ofnext monthâs sales. The cost of goods sold is 60% of sales. Thecompany pays for 40% of its merchandise purchases in the month ofthe purchase and the remaining 60% in the month following thepurchase. All of the accounts payable at June 30 will be paid inJuly. -Monthly selling and administrative expenses are always $56,000.Each month $6,000 of this total amount is depreciation expense andthe remaining $50,000 relates to expenses that are paid in themonth they are incurred. -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. 2-a. Prepare a merchandise purchases budget for July, August,and September. Also compute total merchandise purchases for thequarter ended September 30. 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. 3. Prepare an income statement for the quarter ended September30. 4. Prepare a balance sheet as of September 30. |