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 Accounts receivable $75.000 10.000 66.500 222000 $ 508,500 Plant and equipment net of depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity $ 88,000 11000 109,500 $ 508,500

Answer 1

Requirement 1:

Schedule of Expected Cash Collections
	Month
	July	August	September	Quarter
From accounts receivable	$140,000
From July sales	$133,000	$247,000
From August sales		$140,000	$260,000
From September sales			$136,500
Total cash collections	$273,000	$387,000	$396,500	$1,056,500

Calculation:

	Credit sales	% of collection	July	August	September
From July sales	$380,000	35%	$133,000
		65%		$247,000
From August sales	$400,000
		35%		$140,000
		65%			$260,000
From September sales	$390,000
		35%			$136,500

Requirement 2-a:

Merchandise Purchase Budget
	July	August	September	Total
Budgeted cost of goods sold	$266,000	$280,000	$273,000
Required ending inventory	$70,000	$68,250	$71,750
Total needs	$336,000	$348,250	$344,750	$1,029,000
(Less): Beginning inventory	($66,500)	($70,000)	($68,250)	($204,750)
Required purchases	$269,500	$278,250	$276,500	$824,250

Note: Last month's ending inventory is current month's opening inventory

Calculation:

	July	August	September	October
Sales	$380,000	$400,000	$390,000	$410,000
Cost of goods sold (70%)	$266,000	$280,000	$273,000	$287,000
Required ending inventory (25% of Next months's COGS)	$70,000	$68,250	$71,750

Requirement 2-b:

Schedule of Cash Disbursements for purchases
	July	August	September	Total
From accounts payable	$88,000
From July purchase	$107,800	$161,700
From August purchase		$111,300	$166,950
From September purchase			$110,600
Total cash disbursements	$195,800	$273,000	$277,550	$746,350

Calculations:

	Credit Purchases	% of disbursements	July	August	September
From July Purchases	$269,500	40%	$107,800
		60%		$161,700
From August Purchases	$278,250
		40%		$111,300
		60%			$166,950
From September Purchases	$276,500
		40%			$110,600

Requirement 3:

Beech Corporation
Income Statement
For the Quarter Ended September 30
Sales revenue A	$1,170,000
Expenses:
Cost of goods sold	$819,000
Selling administrative expenses (45,000 x 3)	$135,000
Depreciation expense ($7,000 x 3)	$21,000
Total expenses B	$975,000
Net income A-B	$195,000

Requirement 4:

Beech Corporation
Balance Sheet
September 30
Assets
Cash	$250,150
Accounts receivable (390,000 x 65%)	$253,500
Inventory	$71,750
Plant and equipment, net of depreciation (227,000-21,000 Dep.)	$206,000
Total assets	$781,400
Liabilities and Stockholder's Equity
Accounts payable (276,500 x 60%)	$165,900
Common stock	$311,000
Retained earnings (109,500+195,000 net income)	$304,500
Total liabilities and stockholder's equity	$781,400

Calculations:

Cash
Beginning	75,000
Collections	$1,056,500
Disbursements	($746,350)
Selling and administration expenses	($135,000)
Ending	250,150