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:

Beechs managers have made the following additional assumptions and estimates:

1. Estimated sales for July, August, September, and October will be $320,000, $340,000, $330,000, and $350,000, respectively.

2. All sales are on credit and all credit sales are collected. Each months credit sales are collected 45% in the month of sale and 55% 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 15% of the cost of next months sales. The cost of goods sold is 70% of sales. The company pays for 30% of its merchandise purchases in the month of the purchase and the remaining 70% 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 $40,000. Each month $6,000 of this total amount is depreciation expense and the remaining $34,000 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.

3. Prepare an income statement for the quarter ended September 30.

4. Prepare a balance sheet as of September 30.

Beech Corporation Balance Sheet June 30 Assets Cash Accounts receivable Inventory Plant and equipment, net of depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity $ 73,000 125,000 56,000 221,000 $ 475,000 $ 82,000 309,000 84,000 $ 475,000 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 2 From accounts receivable From July sales From August sales From September sales 125,000 144,000 0 $ 176,000 153,000 0 329.000 $ 0 187,000 148,500 $ 335,500 Quarter $ 125,000 320,000 340,000 148,500 $933,500 Total cash collections 1269.000 Req 1 Req 2A Req 2B Req 3 Req 4 Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases fc quarter ended September 30. Merchandise Purchases Budget July August Budgeted cost of goods sold $ 224,000 $ 238,000 Add: Desired ending merchandise inventory 35,700 34,650 Total needs 259,700 272,650 Less: Beginning merchandise inventory 56,000 35,700 Required purchases $ 203,700 $ 236,950 September $ 231,000 61,250 292,250 X 57,750 $ 248,850 Quarter $ 693,000 61,250X 754,250 X 56,000 $ 689,500 Req 1 Req 2A Req 2B Req 3 Req 4 Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and Se compute total cash disbursements for merchandise purchases for the quarter ended September 30. Schedule of Cash Disbursements for Purchases July August September From accounts payable $ 82,000 $ 0 $ 0 From July purchases 61,110 142,590 0 From August purchases 0 71,085 || 165,865 From September purchases 0 0 74,655 X Total cash disbursements 143,110 213,675 $ 240,520 Quarter $ 82,000 203,700 236,950 74,655 $ 597,305 Req 1 Req 2A Req 2B Req 3 Req 4 Prepare an income statement for the quarter ended September 30. Beech Corporation Income Statement For the Quarter Ended September 30 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense Net income Req 1 Req 2A Req 2B Req3 Req 4 Prepare a balance sheet as of September 30. Beech Corporation Balance Sheet September 30 Assets $ 0 Total assets Liabilities and Stockholders' Equity Total liabilities and stockholders' equity