Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

[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

[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 $ 90,000
Accounts receivable 136,000
Inventory 62,000
Plant and equipment, net of depreciation 210,000
Total assets $ 498,000
Liabilities and Stockholders Equity
Accounts payable $ 71,100
Common stock 327,000
Retained earnings 99,900
Total liabilities and stockholders equity $ 498,000

Beechs managers have made the following additional assumptions and estimates:

Estimated sales for July, August, September, and October will be $210,000, $230,000, $220,000, and $240,000, respectively.

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.

For this quarter, each months ending inventory must equal 20% of the cost of next months sales. The cost of goods sold is 60% 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.

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.

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 for the quarter ended September 30.

4. Prepare a balance sheet as of September 30.

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribedimage text in transcribed Prepare a schedule of expected cash collections for July, August, and September. Prepare a merchandise purchases budget for July, August, and September. Also compute total me quarter ended September 30 . Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Prepare an income statement for the quarter ended September 30. Prepare a balance sheet as of September 30 . \begin{tabular}{|l|l|} \hline \multicolumn{2}{|c|}{ Beech Corporation } \\ \hline \multicolumn{2}{|c|}{ Balance Sheet } \\ \hline Assets & \\ \hline & \\ \hline & \\ \hline & \\ \hline & \\ \hline Total assets & \\ \hline Liabilities and Stockholders' Equity & \\ \hline & \\ \hline \hline & \\ \hline \hline \end{tabular}

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Information Systems

Authors: Ulric Gelinas, Richard Dull, Patrick Wheeler

10th Edition

113393594X, 9781133935940

More Books

Students also viewed these Accounting questions

Question

Looking ahead, what are the biggest risks to their venture?

Answered: 1 week ago

Question

Explain why you agree or disagree with this statement.

Answered: 1 week ago