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Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company's balance sheet as
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company's balance sheet as of June 30th is shown below Beech Corporation Balance Sheet June 30 Assets Cash Accounts receivable Inuentory Plant and equipment, net of depreciation Total assets 76,633 137,850 86,189 235,9E0 $529,180 Liabilities ard stockholders' Equity Accournts payable Common stock Retained earnings $91,633 312,9E0 126,195 $529,180 Total liabilities and stockholders' equity eech's managers have made the following additlonal assumptions and estimates 1. Estlmated sales for July. August, September, and October will be $410,000, $430,000, $420,000, and $440,000, respectively 2. All sales are on credit and all credit sales are collected. Each month's credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts recelvable at June 30 wl be collected In July 3. Each month's ending inventory must equal 30% of the cost of next month's 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 pald in July. and the remalning $50,000 relates to expenses that are pald In the month they are Incurred. does not plan to issue any common stock or repurchase lts own stock during the quarter ended September 30. 4. Monthly selling and administrative expenses are always $58,000. Each month $8,000 of this total amount is depreclation expense 5. The company does not plan to borrow money or pay or declare dlvidends during the quarter ended September 30. The company
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