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Complete this question by entering your answers in the tabs below. Req 2B Req 3 Req 1 Req 2A Req 4 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 Quarter From July purchases From August purchases From September purchases Total cash disbursements Req 3 Req 2A

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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	$	73,000
Accounts receivable		125,000
Inventory		56,000
Plant and equipment, net of depreciation		221,000
Total assets	$	475,000
Liabilities and Stockholders’ Equity
Accounts payable	$	82,000
Common stock		309,000
Retained earnings		84,000
Total liabilities and stockholders’ equity	$	475,000

Beech’s managers have made the following additional assumptions and estimates:

1. Estimated sales for July, August, September, and October will be $320,000, $340,000, $330,000, and $350,000, 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 15% of the cost of next month’s sales. The cost of goods sold is 70% 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 $40,000. Each month $6,000 of this total amount is depreciation expense and the remaining $34,000 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.

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. Also compute total cash disbursements for merchandise purchases for the quarter ended September 30.

3. Prepare an income statement for the quarter ended September 30.

4. Prepare a balance sheet as of September 30.

Answer 1

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Part 1

Schedule of expected cash collections:

	Month	Quarter
	July	August	September
From accounts receivable	125000			125000
From July sales:				0
320000*45%	144000			144000
320000*55%		176000		176000
From August sales:				0
340000*45%		153000		153000
340000*55%			187000	187000
From September sales:				0
330000*45%			148500	148500
Total cash collections	269000	329000	335500	933500

Part 2 A

Merchandise purchases budget:

	Month	Total
	July	August	September
Budgeted units sales	56000	75000	96000	176600
Budgeted cost of goods sold (70% of sales)	224000	238000	231000	693000
Add desired ending merchandise inventory (15% of next month’s cost of goods sold)	35700	34650	36750	36750
Total needs	259700	272650	267750	729750
Less beginning merchandise inventory	56000	35700	34650	56000
Required purchases	203700	236950	233100	673750

Desired ending inventory September = (350000*70%*15%) =36750

Part 2 B

Schedule of cash disbursements for purchases:

	Month	Total
	July	August	September
From accounts payable	82000			82000
For July purchases (203700*30%);(203700*70%)	61110	142590		203700
For August purchases (236950*30%); (236950*70%)		71085	165865	236950
For September purchases (233100*30%);			69930	69930
Total cash disbursements	143110	213675	235795	592580

Part 3

Beech Corporation

Income Statement

For the Quarter Ended September 30

Sales (320000+340000+330000)	990000
Cost of goods sold	693000
Gross margin	297000
Selling and administrative expenses (40000*3)	120000
Net operating income	177000
Interest expenses	0
Net income	177000

Part 4

Beech Corporation

Balance Sheet

September 30

Assets:
Cash (73000+933500-592580-((40000-6000)*3))	311920
Accounts receivable (330000*55%)	181500
Inventory	36750
Plant and equipment, net (221000-(6000*3))	203000
Total assets	$733170
Liabilities and stockholders’ equity
Accounts payable (233100*70%)	163170
Common stock	309000
Retained earnings (84000+177000)	261000
Total liabilities and stockholders’ equity	$733170