EXERCISE 9-11 Cash Budget Analysis [LO 9-8) A cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at least $5,000 to start each quarter. Quarter 2 $6 $7 $? $? *F Cash balance, beginning...... Add collections from customers. Total cash available .......... Less disbursements: Purchase of Inventory ....... Selling and administrative expenses Equipment purchases ... Dividends......... Total disbursements........... Excess (deficiency) of cash available over disbursements.. Financing: Borrowings ...... Repayments (including Interest)......... Total financing....... Cash balance, ending ........ *^M LL J Lowo II 11 13: 1: Wlwas. LES 11:13. L L ^T || "interest will total $1,000 for the year. Required: Fill in the missing amounts in the above table. LO 9-10] 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 30 is shown below: 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. $ 90,000 136,000 62,000 210,000 $498.000 $ 71,100 327,000 99,900 $498,000 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 $240,000, 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 30% of the cost of next 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% Ofis 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. a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30. 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. 2. Prepare an income statement for the quarter ended September 30. Use the absorption format shown in Schedule 9 3. Prepare a balance sheet as of September 30
