Required information

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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	$	76,000
Accounts receivable		137,000
Inventory		86,100
Plant and equipment, net of depreciation		230,000
Total assets	$	529,100
Liabilities and Stockholders Equity
Accounts payable	$	91,000
Common stock		312,000
Retained earnings		126,100
Total liabilities and stockholders equity	$	529,100

Beechs managers have made the following additional assumptions and estimates:

1. Estimated sales for July, August, September, and October will be $410,000, $430,000, $420,000, and $440,000, respectively.

2. All sales are on credit and all credit sales are collected. Each months 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 months ending inventory must equal 30% of the cost of next months 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.

4. Monthly selling and administrative expenses are always $58,000. Each month $8,000 of this total amount is depreciation expense and the remaining $50,000 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.

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.

3. Prepare an income statement that computes net operating income for the quarter ended September 30.

4. Prepare a balance sheet as of September 30.

Required 1:

Schedule of expected cash collections

	july	august	september	quarter
from accounts recievable
from july sales
from august sales
from september sales
total cash collections

Required 2a:

Merchandise purchase budget

	July	August	September	Quarter
Budgeted cost of goods sold
Add: desired ending merchandise
total needs
less: beginning merchandise inventory
required purchases

Required 2b:

Schedule of cash disbursements for purchases

	july	august	september	quarter
From accounts payable
for july purchases
for august purchases
for september purchases
total cash disbursements

Required 3:

Beech corportion

income statement

for the quarter ending september 30

Required 4:

Beech corporation

Balance sheet

September 30

Assets
Cash
Accounts receivable
inventory
plant and equipment, net
Total assets
liabilities and stockholders equity
accounts payable
common stock
retained earnings
total liabilities and stockholders equity