4. value: 1.42 points Required information Exercise 8-13 Beech’s managers have m
ID: 2484422 • Letter: 4
Question
4.
value:
1.42 points
Required information
Exercise 8-13
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 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 month’s ending inventory must equal 20% of the cost of next month’s sales. The cost of goods sold is 75% 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 $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.
Schedule of Expected Cash Collections
Month
July
August
September
Quarter
From accounts receivable
From July sales
From August sales
From September sales
Total cash collections
2-a.
Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30.
Merchandise Purchases Budget
July
August
September
Total
Budgeted cost of goods sold
Add: Desired ending merchandise inventory
Total needs
Less: Beginning merchandise inventory
Required purchases
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.
Schedule of Cash Disbursements for Purchases
July
August
September
Total
From accounts payable
From July purchases
From August purchases
From September purchases
Total cash disbursements
3.
Prepare an income statement for the quarter ended September 30.
Beech Corporation
Income Statement
For the Quarter Ended September 30
Sales
Cost of goods sold
Gross margin
Selling and administrative expenses
Net operating income
Depreciation
Net income
4.
Prepare a balance sheet as of September 30.
Beech Corporation
Balance Sheet
September 30
Assets
Total assets
$0
Liabilities and Stockholders' Equity
Total liabilities and stockholders' equity
$0
Beech’s managers have made the following additional assumptions and estimates:
Explanation / Answer
Schedule of Expected Cash Collections Month July August September Quarter From Accounts Receivable 152625 152625 From July Sales 166500 203500 370000 From August Sales 175500 214500 390000 From Sept Sales 171000 171000 Total Cash Collections 319125 379000 385500 1083625 Working July sales 370000 COGS 277500 Op. Accounts Receivable 152625 Merchandise Purchase Budget July August Sept Total Sales 370000 390000 380000 1140000 COGS 75% * Sales 277500 292500 285000 855000 Add: Desired Inventory 58500 57000 60000 175500 Total Needs 336000 349500 345000 1030500 Less: Beginning Inventory 55500 58500 57000 171000 Required Purchases 280500 291000 288000 859500
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