Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The companys 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 of depreciation		228,000
Total assets	$	533,200
Liabilities and Stockholders Equity
Accounts payable	$	89,000
Common stock		333,000
Retained earnings		111,200
Total liabilities and stockholders equity	$	533,200

Beechs managers have made the following additional assumptions and estimates: Estimated sales for July, August, September, and October will be $390,000, $410,000, $400,000, and $420,000, respectively.

All sales are on credit and all credit sales are collected. Each months credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.

Each months ending inventory must equal 30% of the cost of next months sales. The cost of goods sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase 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 and the remaining $47,000 relates to expenses that are paid in the month they are incurred.

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 is not complete. Complete this question by entering your answers in the tabs below. Req 1Req 2AReq 2BReq 3Req 4 Prepare a balance sheet as of September 30.

quarter ended September 30.

quarter ended September 30.

Schedule of Expected Cash Collections Month July August September Quarter From accounts receivableselected 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 answer correct 140,000 Total cash collections $275,500 $397,000 $406,500 $1,079,000

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

Schedule of Cash Disbursements for Purchases July August September Quarter From accounts payableselected answer 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 answer correct 97,440 Total cash disbursements $184,040 $240,240 $243,960 $668,240

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

Req 1

Prepare a balance sheet as of September 30.

Beech Corporation Balance Sheet September 30 Assets Cashselected answer correct $344,760selected answer incorrect Accounts receivableselected answer correct 273,000selected answer incorrect Inventoryselected answer correct 72,000selected answer incorrect Plant and equipment, netselected answer correct 207,000selected answer correct Total assets $896,760 Liabilities and Stockholders' Equity Accounts payableselected answer correct $435,240selected answer incorrect Common stockselected answer correct 333,000selected answer correct Retained earningsselected answer correct 429,200selected answer correct Total liabilities and stockholders' equity $1,197,440

Req 3