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

$ 83,000

Accounts receivable

126,000

Inventory

69,750

Plant and equipment, net of depreciation

220,000

Total assets

$ 498,750

Liabilities and Stockholders Equity

Accounts payable

$ 81,000

Common stock

348,000

Retained earnings

69,750

Total liabilities and stockholders equity

$ 498,750

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.

Schedule of Expected Cash Collections
	Month
	July	August	September	Quarter
From accounts receivable
From July sales
From August sales
From September sales
Total cash collections

2-a.	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	Total
Budgeted cost of goods sold
Total needs
Required purchases

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.

Schedule of Cash Disbursements for Purchases
	July	August	September	Total
From accounts payable
From July purchases
From August purchases
From September purchases
Total cash disbursements

3.

Prepare an income statement for the quarter ended September 30.

Beech Corporation
Income Statement
For the Quarter Ended September 30

4.

Prepare a balance sheet as of September 30.

Beech Corporation
Balance Sheet
September 30
Assets
Total assets
Liabilities and Stockholders' Equity
Total liabilities and stockholders' equity