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Schedules of Expected Cash Collections and Disbursements; Income Statement; Balance Sheet $[$LO$8-2,$ LO$8-4,$ LO$8-9,$ LO$8-10]$

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Beech Corporation is a merchandising company that is preparing a master budget for the third quarter. The company$$s balance sheet as of June $30$th is shown below:

Beech Corporation

Balance Sheet

June $30$

Assets

Cash $ $72,000$

Accounts receivable $128,000$

Inventory $60,900$

Plant and equipment, net of depreciation $218,000$

Total assets $ $478,900$

Liabilities and Stockholders$$ Equity

Accounts payable $ $79,000$

Common stock $308,000$

Retained earnings $91,900$

Total liabilities and stockholders$$ equity $ $478,900$

Exercise $8-12($Algo$)$

Beech$$s managers made the following additional assumptions and estimates:

Estimated sales for July, August, September, and October will be $$290,000,$ $$310,000,$ $$300,000,$ and $$320,000,$ respectively.

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.

Each month$$s ending inventory must equal $30\%$ of the cost of next month$$s sales. The cost of goods sold is $70\%$ 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.

Monthly selling and administrative expenses are always $$54,000.$ Each month $$5,000$ of this total amount is depreciation expense and the remaining $$49,000$ relates to expenses that are paid in the month they are incurred.

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 $30.$

Required $1$Required $2$ARequired $2$BRequired $3$Required $4$

Prepare a schedule of expected cash collections for July, August, and September. Also, compute total cash collections for the quarter ended September $30.$

$1)$ Schedule of Expected Cash Collections

July August September Quarter

From accounts receivable

From July sales

From August sales

From September sales

Total cash collections

$2$a$)$ Merchandise Purchases Budget

July August September Quarter

Budgeted cost of goods sold

Add: Desired ending merchandise inventory

Total needs

Less: Beginning merchandise inventory

Required purchases

$2$b$)$ Schedule of Cash Disbursements for Purchases

July August September Quarter

From accounts payable

From July purchases

From August purchases

From September purchases

Cash disbursements

$3)$ Income Statement

Sales

Cost of goods sold

Gross margin

Selling and administrative expenses

Net operating income $($loss$)$

$4)$ Balance Sheet

Assets

Total assets

Liabilities and Stockholders' Equity

Total liabilities and stockholders' equity