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My answers are coming out wrong [The following information applies to the questions displayed below.] Beech Corporation is a merchandising company that is preparing a

My answers are coming out wrong

[The following information applies to the questions displayed below.]

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

$ 73,000

Accounts receivable

125,000

Inventory

56,000

Plant and equipment, net of depreciation

221,000

Total assets

$ 475,000

Liabilities and Stockholders Equity

Accounts payable

$ 82,000

Common stock

309,000

Retained earnings

84,000

Total liabilities and stockholders equity

$ 475,000

2.

value: 1.00 points

Required information

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.

Beech Corporation

Schedule of Expected Cash Collections

Month

July

August

September

Quarter

From accounts receivable

$125,000

$0

$0

$125,000

From July sales

144,000

176,000

0

320,000

From August sales

0

153,000

187,000

340,000

From September sales

0

0

148,500

148,500

Total cash collections

$269,000

$329,000

$335,500

$933,500

2-a.

Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30.

Beech Corporation

Merchandise Purchases Budget

July

August

September

Total

Budgeted cost of goods sold

$224,000

$238,000

$231,000

$693,000

Add: Desired ending merchandise inventory

35,700

34,650

52,500

122,850

Total needs

259,700

272,650

283,500

815,850

Less: Beginning merchandise inventory

56,000

35,700

34,650

126,350

Required purchases

$203,700

$236,950

$248,850

$689,500

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

August

September

Total

From accounts payable

$82,000

0

0

$82,000

From July purchases

61,110

142,590

0

203,700

From August purchases

0

71,085

165,865

236,950

From September purchases

0

0

74,655

74,655

Total cash disbursements

$143,110

$213,675

$240,520

$597,305

3.

Prepare an income statement for the quarter ended September 30 using an absorption income statement format.

Beech Corporation

Income Statement

For the Quarter Ended September 30

Sales

$990,000

Cost of goods sold

693,000

Gross margin

297,000

Selling and administrative expenses

102,000

Net operating income

195,000

Interest expense

0

Net income

$195,000

4.

Prepare a balance sheet as of September 30.

Beech Corporation

Balance Sheet

September 30

Assets

Cash

Accounts receivable

Inventory

Plant and equipment, net

Total assets

$0

Liabilities and Stockholders' Equity

Accounts payable

Common stock

Retained earnings

Total liabilities and stockholders' equity

$0

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