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	$	96,000
Accounts receivable		139,000
Inventory		70,200
Plant and equipment, net of depreciation		228,000
Total assets	$	533,200
Liabilities and Stockholders Equity
Accounts payable	$	89,000
Common stock		333,000
Retained earnings		111,200
Total liabilities and stockholders equity	$	533,200

Beechs managers have made the following additional assumptions and estimates: Estimated sales for July, August, September, and October will be $390,000, $410,000, $400,000, and $420,000, 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 60% 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 $7,000 of this total amount is depreciation expense and the remaining $47,000 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. Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1Req 2AReq 2BReq 3Req 4 Prepare a balance sheet as of September 30.

quarter ended September 30.

quarter ended September 30.

Schedule of Expected Cash Collections
	Month
	July	August	September	Quarter
From accounts receivableselected answer correct	$139,000selected answer correct			$139,000
From July sales	136,500selected answer correct	253,500selected answer correct		390,000
From August sales		143,500selected answer correct	266,500selected answer correct	410,000
From September sales			140,000selected answer correct	140,000
Total cash collections	$275,500	$397,000	$406,500	$1,079,000

Merchandise Purchases Budget
	July	August	September	Quarter
Budgeted cost of goods soldselected answer correct	$234,000selected answer correct	$246,000selected answer correct	$240,000selected answer correct	$720,000selected answer correct
Add: Desired ending merchandise inventoryselected answer correct	73,800selected answer correct	72,000selected answer correct	75,600selected answer correct	221,400selected answer incorrect
Total needs	307,800selected answer correct	318,000selected answer correct	315,600selected answer correct	941,400selected answer incorrect
Less: Beginning merchandise inventoryselected answer correct	70,200selected answer correct	73,800selected answer correct	72,000selected answer correct	216,000selected answer incorrect
Required purchases	$237,600selected answer correct	$244,200selected answer correct	$243,600selected answer correct	$725,400selected answer correct

Schedule of Cash Disbursements for Purchases
	July	August	September	Quarter
From accounts payableselected answer correct	$89,000selected answer correct			$89,000
From July purchases	95,040selected answer correct	142,560selected answer correct		237,600
From August purchases		97,680selected answer correct	146,520selected answer correct	244,200
From September purchases			97,440selected answer correct	97,440
Total cash disbursements	$184,040	$240,240	$243,960	$668,240

Beech Corporation
Income Statement
For the Quarter Ended September 30
Salesselected answer correct	$1,200,000selected answer correct
Cost of goods soldselected answer correct	720,000selected answer correct
Gross marginselected answer correct	480,000
Selling and administrative expensesselected answer correct	162,000selected answer correct
Net operating incomeselected answer correct	318,000
Net incomeselected answer correct	$318,000

Req 1

Prepare a balance sheet as of September 30.

Beech Corporation
Balance Sheet
September 30
Assets
Cashselected answer correct	$344,760selected answer incorrect
Accounts receivableselected answer correct	273,000selected answer incorrect
Inventoryselected answer correct	72,000selected answer incorrect
Plant and equipment, netselected answer correct	207,000selected answer correct
Total assets	$896,760
Liabilities and Stockholders' Equity
Accounts payableselected answer correct	$435,240selected answer incorrect
Common stockselected answer correct	333,000selected answer correct
Retained earningsselected answer correct	429,200selected answer correct
Total liabilities and stockholders' equity	$1,197,440

Req 3