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 Cash Accounts receivable Inventory Plant and equipment, net of depreciation $ 75,000 140,000 66,500 227,000 Total assets $ 508,500 Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings $ 88,000 311,000 109,500 Total liabilities and stockholders' equity $ 508,500

Answer 1

		Schedule of Expected Cash Collections
					July	August	September	Quarter
From Accounts receivable					140,000			140,000
From July sales		(380,000*35%;65%)			133000	247000		380000
From August sales		(400,000*35%;65%)				140000	260000	400000
From September sales		(390,000*35%)					136500	136500
Total cash collections					273,000	387000	396500	1,056,500
			Accounts receivable 390,000*65%=				253500
2-a)		Merchandise Purchase Budget
					July	August	September	Total
Budgeted cost of goods sold			(70% of sales)		266000	280000	273000	819000
Add:Desired ending merchandise inventory					70000	68250	71750	71750
total needs					336000	348250	344750	890750
less: Beginning merchandise inventory					66,500	70000	68250	66,500
Required purchased					269,500	278250	276500	824,250
2-b)		Schedule of Cash Disbursement for purchases
					July	August	September	Total
From Accounts payable					88,000			88,000
From July purchases					107800	161700		269500
From august purchases						111300	166950	278250
From September purchases							110600	110600
total cash disbursements					195,800	273000	277550	746,350
		Accounts payable		276500*60%=		165900
3)		Income Statement
	Sales						1170000
	cost of goods sold						819000
	Gross profit						351000
	Selling and administrative expense				(52000*3)		156000
	net operating income						195000
	interest expense						0
	net income (loss)						195000
4)		Balance sheet
	Assets
	Cash						250,150
	Account receivable						253500
	inventory						71750
	Plant and Equipment,net						206000
	Total Assets						781400
	Liabilities and Stockholders Equity
	Accounts payable						165900
	Capital Stock						311,000
	Retained earnings						304500
	Total liabilities & Stockholder's Equity						781400