Beech's managers have made the following additional assumptions and estimates: 1. Estimated sales for July, August, September, and October will be $210,000, $230,000, $220,000, and $240,000, respectively. 2. All sales are on credit and all credit sales are collected. Each month's credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receiv- able at June 30 will be collected in July. 3. Each month's ending inventory must equal 30% of the cost of next month's 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. 4. Monthly selling and administrative expenses are always $60,000, Each month $5,000 of this total amount is depreciation expense and the remaining $55,000 relates to expenses that are paid in the month they are incurred. 5. 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 com- pute 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. b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Also compute total cash disbursements for merchandise pur- chases for the quarter ended September 30. 3. Prepare an income statement for the quarter ended September 30. Use the absorption format shown in Schedule 9. 4. Prepare a balance sheet as of September 30.
Beech's managers have made the following additional assumptions and estimates: 1. Estimated sales for July, August, September, and October will be $210,000, $230,000, $220,000, and $240,000, respectively. 2. All sales are on credit and all credit sales are collected. Each month's credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receiv- able at June 30 will be collected in July. 3. Each month's ending inventory must equal 30% of the cost of next month's 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. 4. Monthly selling and administrative expenses are always $60,000, Each month $5,000 of this total amount is depreciation expense and the remaining $55,000 relates to expenses that are paid in the month they are incurred. 5. 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 com- pute 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. b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Also compute total cash disbursements for merchandise pur- chases for the quarter ended September 30. 3. Prepare an income statement for the quarter ended September 30. Use the absorption format shown in Schedule 9. 4. Prepare a balance sheet as of September 30.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Beech's managers have made the following additional assumptions and estimates:
1. Estimated sales for July, August, September, and October will be $210,000, $230,000,
$220,000, and $240,000, respectively.
2. All sales are on credit and all credit sales are collected. Each month's credit sales are collected
35% in the month of sale and 65% in the month following the sale. All of the accounts receiv-
able at June 30 will be collected in July.
3. Each month's ending inventory must equal 30% of the cost of next month's 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.
4. Monthly selling and administrative expenses are always $60,000. Each month $5,000 of this
total amount is depreciation expense and the remaining $55,000 relates to expenses that are
paid in the month they are incurred.
5. 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 com-
pute 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.
b. Prepare a schedule of expected cash disbursements for merchandise purchases for July,
August, and September. Also compute total cash disbursements for merchandise pur-
chases for the quarter ended September 30.
3. Prepare an income statement for the quarter ended September 30. Use the absorption format
shown in Schedule 9.
4. Prepare a balance sheet as of September 30.
Transcribed Image Text: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
$ 90,000
136,000
62,000
Cash .....
..... ...
Accounts receivable
Inventory
Plant and equipment, net of depreciation
.....
210,000
$498,000
Total assets
Liabilities and Stockholders' Equity
Accounts payable
Common stock
Retained earnings
$ 71,100
327,000
99,900
$498,000
Total liabilities and stockholders' equity
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