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 company's balance sheet as of June 30th is shown below: Beech Corporation Balance Sheet June 30 Assets Cash Accounts receivable Inventory Plant and equipment, net of depreciation $ 85,000 141,000 83,250 226,000 Total assets $ 535,250 Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings $ 87,000 350,000 98,250 Total liabilities and stockholders' equity $ 535,250 Beech's managers have made the following additional assumptions and estimates: 1. Estimated sales for July, August, September, and October will be $370,000, $390,000, $380,000, and $400,000, 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 month's sales. The cost of goods sold is 75% 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 $50,000. Each month $7,000 of this total amount is depreciation expense and the remaining $43,000 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 $ 0 129,500 240,500 370,000 From accounts receivable From July sales From August sales From September sales Total cash collections 136,500 253,500 390,000 133,000 133,000 $ 386,500 $ 893,000 $ 129,500 $ 377,000 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 $ 277,500 $ 292,500 $ 285,000 $ 855,000 Add: Desired ending merchandise inventory 87,750 85,500 120,000 293,250 Total needs 365,250 378,000 405,000 1,148,250 Less: Beginning merchandise inventory 83,250 87,750 85,500 256,500 Required purchases $ 282,000 $ 290,250 $ 319,500 $ 891,750 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 $ 0 From accounts payable From July purchases From August purchases From September purchases Total cash disbursements 112,800 169,200 282,000 116,100 174,150 290,250 127,800 127,800 $ 112,800 $ 285,300 $ 301,950 $ 700,050 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 $ 1,140,000 Cost of goods sold 855,000 Gross margin 285,000 Selling and administrative expenses 150,000 Net operating income 135,000 4. Prepare a balance sheet as of September 30. Beech Corporation Balance Sheet September 30 Assets Cash Accounts receivable Inventory Plant and equipment, net $ 0 Total assets Liabilities and Stockholders' Equity Accounts payable Total liabilities and stockholders' equity $