Beech Corporation is a merchandising company that is preparing amaster budget for the third quarter of the calendar year. Thecompany’s balance sheet as of June 30th is shown below:

Beech Corporation
Balance Sheet
June 30
Assets
Cash	$	96,000
Accounts receivable		139,000
Inventory		70,200
Plant and equipment, net ofdepreciation		228,000
Total assets	$	533,200
Liabilitiesand Stockholders’ Equity
Accounts payable	$	89,000
Common stock		333,000
Retained earnings		111,200
Total liabilities andstockholders’ equity	$	533,200

Beech’s managers have made the following additional assumptionsand estimates: Estimated sales for July, August, September, andOctober will be $390,000, $410,000, $400,000, and $420,000,respectively.

All sales are on credit and all credit sales are collected. Eachmonth’s credit sales are collected 35% in the month of sale and 65%in the month following the sale. All of the accounts receivable atJune 30 will be collected in July.

Each month’s ending inventory must equal 30% of the cost of nextmonth’s sales. The cost of goods sold is 60% of sales. The companypays for 40% of its merchandise purchases in the month of thepurchase and the remaining 60% in the month following the purchase.All of the accounts payable at June 30 will be paid in July.

Monthly selling and administrative expenses are always $54,000.Each month $7,000 of this total amount is depreciation expense andthe remaining $47,000 relates to expenses that are paid in themonth they are incurred.

The company does not plan to borrow money or pay or declaredividends during the quarter ended September 30. The company doesnot plan to issue any common stock or repurchase its own stockduring 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 thequarter ended September 30.

2-a. Prepare a merchandise purchases budget for July, August,and September. Also compute total merchandise purchases for thequarter ended September 30.

2-b. Prepare a schedule of expected cash disbursements formerchandise purchases for July, August, and September. Also computetotal cash disbursements for merchandise purchases for the quarterended September 30.

3. Prepare an income statement for the quarter ended September30.

4. Prepare a balance sheet as of September 30. Answer is notcomplete. Complete this question by entering your answers in thetabs below. Req 1Req 2AReq 2BReq 3Req 4 Prepare a balance sheet asof September 30.

quarter ended September 30.

quarter ended September 30.

Schedule of Expected Cash Collections Month July August September Quarter From accountsreceivableselected answer correct $139,000selected answer correct $139,000 From July sales 136,500selected answer correct 253,500selected answer correct 390,000 From August sales 143,500selected answer correct 266,500selected answer correct 410,000 From September sales 140,000selected answercorrect 140,000 Total cash collections $275,500 $397,000 $406,500 $1,079,000

Merchandise Purchases Budget July August September Quarter Budgeted cost of goodssoldselected answer correct $234,000selected answer correct $246,000selected answer correct $240,000selected answer correct $720,000selected answer correct Add: Desired ending merchandiseinventoryselected answer correct 73,800selected answercorrect 72,000selected answercorrect 75,600selected answercorrect 221,400selectedanswer incorrect Total needs 307,800selected answer correct 318,000selected answer correct 315,600selected answer correct 941,400selected answer incorrect Less: Beginning merchandiseinventoryselected answer correct 70,200selected answercorrect 73,800selected answercorrect 72,000selected answercorrect 216,000selectedanswer incorrect Required purchases $237,600selected answercorrect $244,200selected answercorrect $243,600selected answercorrect $725,400selected answercorrect

Schedule of Cash Disbursements for Purchases July August September Quarter From accounts payableselectedanswer correct $89,000selected answer correct $89,000 From July purchases 95,040selected answer correct 142,560selected answer correct 237,600 From August purchases 97,680selected answer correct 146,520selected answer correct 244,200 From September purchases 97,440selected answercorrect 97,440 Total cash disbursements $184,040 $240,240 $243,960 $668,240

Beech Corporation Income Statement For the Quarter Ended September 30 Salesselected answercorrect $1,200,000selected answer correct Cost ofgoods soldselected answer correct 720,000selected answer correct Gross marginselected answercorrect 480,000 Sellingand administrative expensesselected answer correct 162,000selected answer correct Net operating incomeselectedanswer correct 318,000 Net incomeselected answercorrect $318,000

Req 1

Prepare a balance sheet as of September 30.

Beech Corporation Balance Sheet September 30 Assets Cashselected answercorrect $344,760selected answer incorrect Accountsreceivableselected answer correct 273,000selected answer incorrect Inventoryselected answer correct 72,000selected answer incorrect Plant andequipment, netselected answer correct 207,000selected answer correct Total assets $896,760 Liabilities and Stockholders'Equity Accountspayableselected answer correct $435,240selected answer incorrect Commonstockselected answer correct 333,000selected answer correct Retainedearningsselected answer correct 429,200selected answer correct Total liabilities andstockholders' equity $1,197,440

Req 3