Question

Chel Required information 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 Liabilities and Stokkholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity 96,000 139,000 70.200 228,000 $53),200 09.000 333,000 111,200 $53),200 Beech's managers have made the following additional assumptions and estimates: 1. Estimated sales for July, August, September, and October will be $390,000, $410,000, $400,000, and $420,000, 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 20% of the cost of next month's sales. The cost of goods sold is 60% 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 $54,000. Each month $7.000 of this total amount is depreciation expense and the remainin 47 relates to ovnences that are nain in the month they are in mar < Prex 4 of 9 III Next >

Answer 1

Answer with working note is given below

Sales Budget July $390,000 August $410,000 September Quarter $400,000 $1,200,000 Budgeted Sales (value) 1. Expected Cash Collection August July 139,000 175,500 June Month-Opening balance July Month August Month September Month Total Collection from Customers 214,500 184,500 September Quarter 139,000 390,000 225,500 410,000 180,000 180,000 $405,500 $1,119,000 $314,500 $399,000 COGS Sales COGS -60% July 390,000 234,000 August 410,000 246,000 September Quarter | October | 400,000 1,200,000 420,000 240,000 720,000 252,000| 2.a) Inventory Purchase Budget Budgeted COGS Add: Closing inventory - (20% of next month COGS) July 234,000 49,200 283,200 70,200 $213,000 August 246,000 48,000 294,000 49,200 $244,800 September 240,000 50,400 290,400 48,000 $242,400 Quarter 720,000 50,400 770,400 70,200 $700,200 Less: Opening Inventory Purchase Budget Closing stock of month will be opening stock of next month | 2.b) Expected Cash disbursements for Materials Purchases August September Quarter July 89,000 63,900 June Purchase July Purchase August Purchase September Purchase Total purchase payment to Vendors 149,100 73,440 171,360 72,720 $244,080 213,000 244,800 72,720 $530,520 | $152,900 $222,540 Selling and administration expenses Selling and administration expenses in Cash Depreciation Total Selling and administration expenses July 47,000 7,000 $54,000 August 47,000 7,000 $54,000 September 47,000 7,000/ $54,000 Quarter 141,000 21,000 $162,000 July 96,000 314,500 410,500 August 210,600 399,000 609,600 September 340,060 405,500 745,560 Quarter 96,000 1,119,000 1,215,000 Cash Budget Opening Balance Add: cash collections Total cash available Less: cash disbursements For inventory purchase For selling and administrative expense excluding depreciation Total cash disbursement Closing balance Cash 152,900 47,000 199,900 $210,600 222,540 47,000 269,540 $340,060 244,080 47,000 291,080 $454,480 619,520 141,000 760,520 $454,480 Beech Corporation Budgeted Income Statement for September 30th Sales Less: Cost of Goods sold Gross Margin Operating expenses Selling and administrative expense Net Operating Income 1,200,000 720,000 480,000 162,000 318,000 $454,480 $220,000 $50,400 Beech Corporation Budgeted Balance Sheet for September 30th Assets Cash Accounts receivable Inventory Buildings and equipment net of depreciation Less: Depreciation during the Quarter Total Assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained Earnings Total Liabilities and Stockholders' Equity $228,000 $21,000 $207,000 $931,880 $169,680 $333,000 $429,200 $931,880 Retained Earnings balance Opening balance Add: Net profit Closing balance of Retained earnings $111,200 $318,000 $429,200