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:

Exercise 8-12 REV (Algo)

Beechs managers have made the following additional assumptions and estimates:

1. Estimated sales for July, August, September, and October will be $310,000, $330,000, $320,000, and $340,000, respectively.

2. 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.

3. Each months ending inventory must equal 30% of the cost of next months 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.

4. Monthly selling and administrative expenses are always $58,000. Each month $6,000 of this total amount is depreciation expense and the remaining $52,000 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 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.

Assets Cash Accounts receivable Inventory Beech Corporation Balance Sheet June 30 Plant and equipment, net of depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity $ 83,000 126,000 69,750 220,000 $ 498,750 $ 81,000 348,000 69,750 $ 498,750 Req 1 Req 2A Req 2B Prepare a schedule of expected cash collections for July, August, and September. Schedule of Expected Cash Collections Month August September Quarter From accounts receivable From July sales From August sales From September sales Total cash collections July $ 126,000 108,500 $ 126,000 310,000 214,500 330,000 112,000 112,000 $ 234,500 $317,000 $326,500 $ 878,000 201,500 115,500 Req 1 Req 2A Req 2B Prepare a merchandise purchases budget for July, August, and September. Also compute total mercha quarter ended September 30. Merchandise Purchases Budget July Budgeted cost of goods sold Add: Desired ending merchandise inventory Total needs Less: Beginning merchandise inventory Required purchases August September Quarter $ 232,500 $ 247,500 $ 240,000 $720,000 Req 1 Req 2A Req 2B Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Schedule of Cash Disbursements for Purchases August September From accounts payable From July purchases From August purchases From September purchases Total cash disbursements July $77,000 $ 77,000 $ 0 $ Quarter $ 77,000 0 0 0 0 $ 77,000