CH. 7 #3

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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 companys balance sheet as of June 30th is shown below:

Beech Corporation Balance Sheet June 30
Assets
Cash	$ 86,000
Accounts receivable	138,000
Inventory	75,000
Plant and equipment, net of depreciation	229,000
Total assets	$ 528,000
Liabilities and Stockholders Equity
Accounts payable	$ 90,000
Common stock	351,000
Retained earnings	87,000
Total liabilities and stockholders equity	$ 528,000

Beech's managers have made the following additional assumptions and estimates 1. Estimated sales for July, August, September and October will be $400,000, $420,000, $410,000, and $430,000, 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 receivable at June 30 will be collected in July 3. Each month's ending inventory must equal 25% of the cost of next month's 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 will be paid 4. Monthly selling and administrative expenses are always $56,000. Each month $8,000 of this total amount is depreciation expense and the remaining $48,000 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 Beech Corporation Schedule of Expected Cash Collections Month July August September Quarter 0 From accounts receivable From July sales 0 From August sales 0 From September sales S 0 0 0 0 Total cash collections