Exercise 7-12 Beech's managers have made the following additional assumptions and estimates 1. Estimated sales for July, August, September, and October will be $210,000, $230,000, $220,000, and 2. All sales are on credit and all credit sales are collected. Each month's credit sales are collected 35% in $240,000, respectively 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 30% of the cost of next month's 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 4. Monthly selling and administrative expenses are always $60,000. Each month $5,000 of this total amount is depreciation expense and the remaining $55,000 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 $ 136,000 AugustSeptember Quarter $ 136,000 210,000 230,000 77,000 $ 209,500 217,000 $ 226,500$ 653,000 From accounts receivable From July sales From August sales From September sales Total cash collections 73,500 136,500 149,500 77,000 80,500 2-a. Prepare a merchandise purchases budget for July, August, and September. Also compute tota merchandise purchases for the quarter ended September 30 Beech Corporation Merchandise Purchases Budget July Total August SeptemberTo Budgeted cost of goods sold Add: Desired ending merchandise inventory 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 Beech Corporation Schedule of Cash Disbursements for Purchases July AugustSeptember Total From accounts payable From July purchases From August purchases From September purchases Total cash disbursements 3. Prepare an income statement that computes net operating income 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 60,000 (60,000) Prepare a balance sheet as of September 30. 4. Beech Corporation Balance Sheet September 30 Assets 0 Total assets Liabilities and Stockholders' Equity 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