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 $ 95,000
Accounts receivable 142,000
Inventory 54,000
Plant and equipment, net of depreciation 225,000
Total assets $ 516,000
Liabilities and Stockholders’ Equity
Accounts payable $ 86,000
Common stock 332,000
Retained earnings 98,000
Total liabilities and stockholders’ equity $ 516,000
Beech’s managers have made the following additional assumptions and estimates:
1.
Estimated sales for July, August, September, and October will be $360,000, $380,000, $370,000, and $390,000, 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 receivable at June 30 will be collected in July.

3.
Each month’s ending inventory must equal 25% 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 $48,000. Each month $7,000 of this total amount is depreciation expense and the remaining $41,000 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 compute total cash collections for the quarter ended September 30.

Schedule of Expected Cash Collections
Month
July August September Quarter
From accounts receivable $0
From July sales 126,000 234,000 360,000
From August sales 133,000 247,000 380,000
From September sales 129,500
Total cash collection $126,000 $367,000 $376,500 $869,50

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

Merchandise Purchases Budget
July August September Total
Budgeted cost of goods sold
Add: Desired ending merchandise inventory
Total needs
Less: Beginning merchandise inventory
Required purchases

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.

Schedule of Cash Disbursements for Purchases
July August September Total
From accounts payable $0
From July purchases 0
From August purchases 0
From September purchases 0
Total cash disbursements $0 $0 $0 $0
3.
Prepare an income statement for the quarter ended September 30.

Beech Corporation
Income Statement
For the Quarter Ended September 30
0
0
$0

4.
Prepare a balance sheet as of September 30.

Beech Corporation
Balance Sheet
September 30
Assets
Total assets $0
Liabilities and Stockholders' Equity
Total liabilities and stockholders' equity $0