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Schedules of Expected Cash Collections and Disbursements; Income Statement; Balance Sheet [LO8-2, LO8-4, LO8-9, LO8-10]

[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 companys balance sheet as of June 30th is shown below:

Beech Corporation
Balance Sheet
June 30
Assets
Cash	$	72,000
Accounts receivable		128,000
Inventory		60,900
Plant and equipment, net of depreciation		218,000
Total assets	$	478,900
Liabilities and Stockholders Equity
Accounts payable	$	79,000
Common stock		308,000
Retained earnings		91,900
Total liabilities and stockholders equity	$	478,900

Exercise 8-12

Beechs managers have made the following additional assumptions and estimates:

Estimated sales for July, August, September, and October will be $290,000, $310,000, $300,000, and $320,000, respectively.

All sales are on credit and all credit sales are collected. Each months 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 months ending inventory must equal 30% of the cost of next months sales. The cost of goods sold is 70% 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 $54,000. Each month $5,000 of this total amount is depreciation expense and the remaining $49,000 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.

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 $128,000 $128,000 From July sales 101,500 188,500 290,000 From August sales 108,500 201,500 310,000 From September sales 105,000 105,000 Total cash collections $229,500 $297,000 $306,500 $833,000

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 Quarter Budgeted cost of goods sold $203,000 $217,000 $210,000 $630,000 Add: Desired ending merchandise inventory 65,100 63,000 67,200 67,200 Total needs 268,100 280,000 277,200 697,200 Less: Beginning merchandise inventory 60,900 65,100 63,000 Required purchases $207,200 $214,900 $214,200 $636,300

Need #2b, 3, 4

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