[The following information applies to the questions displayed below.] Beech Corp
ID: 2484424 • Letter: #
Question
[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
$ 85,000
Accounts receivable
141,000
Inventory
83,250
Plant and equipment, net of depreciation
226,000
Total assets
$ 535,250
Liabilities and Stockholders’ Equity
Accounts payable
$ 87,000
Common stock
350,000
Retained earnings
98,250
Total liabilities and stockholders’ equity
$ 535,250
3.
value:
1.42 points
Required information
Exercise 8-12
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.
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
Depreciation
Net operating income
Selling and administrative expenses
Net income
4.
Prepare a balance sheet as of September 30.
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
[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:
Explanation / Answer
1)
2a & b)
3)
4)
Balance Sheet:
Months July August September October Sales $ 3,70,000.00 $ 3,90,000.00 $ 3,80,000.00 $ 4,00,000.00 Collection of accounts receivable $ 1,41,000.00 July sales $ 1,29,500.00 $ 2,40,500.00 August sales $ 1,36,500.00 $ 2,53,500.00 Sept sales $ 1,33,000.00 $ 2,47,000.00 Collection from customers $ 2,70,500.00 $ 3,77,000.00 $ 3,86,500.00 Accounts receivable at the quarter end $ 2,47,000.00Related Questions
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