Beech Corporation is a merchandising company that is preparing a master budget f

Question

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:

Required information

Estimated sales for July, August, September, and October will be $270,000, $290,000, $280,000, and $300,000, respectively.

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.

Each month’s ending inventory must equal 30% of the cost of next month’s sales. The cost of goods sold is 60% 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.

Monthly selling and administrative expenses are always $50,000. Each month $5,000 of this total amount is depreciation expense and the remaining $45,000 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.

Prepare a balance sheet as of September 30.

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

Beech Corporation All Amounts in $ Statement of Expected Cash Receipts from Accounts Receivables for the quarter ended September 30 July August September Total Receivables from June Sales 130000 130000 July Sales 94500 175500 270000 August Sales 101500 188500 290000 September Sales 98000 98000 Total Collections 224500 277000 286500 788000 Statement of Purchases for the quarter ended September 30 July August September Total Opening FG Inventory 48600 52200 50400 48600 Purchases 165600 172200 171600 509400 Closing FG Inventory 52200 50400 54000 54000 Cost of Goods Sold 162000 174000 168000 504000 Disbursements for Purchases for the quarter ended September 30 July August September Total Payables from June Purchases 77000 77000 July Purchases 66240 99360 165600 August Purchases 68880 103320 172200 September Purchases 68640 68640 Total Disbursements 143240 168240 171960 483440 Calculation of Closing Cash Balance as on September 30 Opening Cash Balance 92000 Total Collections in the quarter 788000 Total Disbursements in the quarter 483440 Expenses paid in the quarter 135000 618440 Only cash expenses ; depreciation not considered Closing Cash Balance 261560 Income Statement for the quarter ended September 30 Sales 840000 Cost of Goods Sold 504000 Contribution Margin 336000 Expenses 135000 Depreciation 15000 150000 Net Operating Income 186000 Balance Sheet as on September 30 Assets   Cash 261560   Accounts receivable 182000   Inventory 54000   Plant and equipment, net of depreciation 201000   Total assets 698560 Liabilities and Stockholders’ Equity   Accounts payable 102960   Common stock 329000   Retained earnings 266600   Total liabilities and stockholders’ equity 698560

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.