Required information Schedules of Expected Cash Collections and Disbursements; I

Question

Required information Schedules of Expected Cash Collections and Disbursements; Income Statement; Balance Sheet [LO8-2, LO8-4, LO8-9, LO8-10] [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 Total assets 76,000 137,000 86,100 230,000 529,100 Liabilities and Stockholders Equity Accounts payable Common stock Retained earnings 91,000 312,000 126,100 529,100 Total liabilities and stockholders' equity

Explanation / Answer

Solution - Preparation of Balance sheet

Beech Corporation

Balance sheet

September 30

Note 1 - Accounts Payable

Purchases = Cost of goods sold + ending inventory - Beginning inventory

Purchases = ($420000*70%) + ($440000*70%*30%) - ($420000*70%*30%)

Purchases = $294000 + $92400 - $88200

Purchases = $298200

Accounts Payable = ($298200*60%) = $178920

Note 2 - Net Income Calculation

Sales (for Quarter) = ($410000+$430000+$420000) = $1260000

Gross Profit = 30% since cost of goods sold is 70%

Gross Profit = ($1260000*30%) = $378000

Selling and Administrative expenses (For Quarter) = ($58000*3) = $174000

Net Income = ($378000 - $174000) = $204000

Retained Earnings = ($126100 + $204000) = $330100

Particulars Amount Assets Cash (given) $249620 Accounts Receivable ($420000*65%) $273000 Plant and Equipment, net ($230000) - ($8000*3) $206000 Inventory (given) $92400 Total Assets $821020 Liabilities and Stockholders' equity Accounts Payable (Note 1) $178920 Common stock $312000 Retained Earnings (Note 2) $330100 Total Liabilities and Stockholders' equity $821020

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